United Drug has agreed to buy Dublin-based laboratory supplies company JVA Analytical for up to €21 million.

The deal will mean a multimillion payout for the company's two directors - managing director John Ryan and sales director Gerry Grady - who Companies Office documents show were the only shareholders in the business in February this year.

JVA Analytical, based in Dublin's Longmile Road, was founded in 1992. It supplies laboratory instruments, consumables, services and supplies to laboratories. It employs 19 people, all of whom will remain with the business.

United Drug will initially pay €16.5 million for JVA, with a further €4.5 million due over the coming 24 months based on the company meeting specified targets.

Liam FitzGerald, United Drug chief executive, said JVA would form "an important part" of the firm's medical scientific division.

The market viewed the acquisition as a positive bolt-on for United Drug. Its rose by 2.5 cent to close at €3.82 in a very weak Dublin market.

Documents lodged with the Companies Office show that JVA Analytical recorded a gross profit of almost €3.5 million in the year to the end of May 2006.

Administrative expenses of €3.5 million, including €2 million in payments to directors, led to an operating loss of €23,000 for the year, the most recent period for which figures are available.

The firm carried forward retained profits of €839,476 at that stage.

Further documents show that Mr Ryan owned 60 per cent of JVA in February this year, with Mr Grady holding the remaining 40 per cent.