OMEGA Diagnostics has announced the closure of its German allergy business after failing to conclude a sale of the operation.

The Clackmannanshire-based firm said it had decided to initiate insolvency proceedings through the German court system, as soon as practically possible, under the guidance of its legal advisers.

“The contingent cost associated with this closure is not expected to be more than £0.45m and could be significantly less than this figure,” said Omega, which focuses on diagnosing allergies, food intolerances and infectious diseases.

Aim-listed Omega said last month that it planned to reduce its cost base significantly with the closure of both the German allergy business and its manufacturing site in Pune, India.

The sites incurred total losses of around £800,000 in the latest year.

The company said then it was exploring whether the two loss making operations could be sold.

It said the cash cost of closing the operations was not expected to be greater than £0.6m.

The closure decision followed a strategic review undertaken by new chief executive Colin King, who replaced founder Andrew Shepherd in December.

Omega is focused on three core products including Visitect CD4, which allows field clinicians to carry out blood tests on HIV patients and adjust medication as required.

The company signed a global distribution deal for its allergy testing kits last month.with Immunodiagnostic Systems.

Omega has 134 employees in the UK and 43 in Germany.

It will work with IDS to introduce an initial launch panel of 51 allergy tests into the market. Omega Diagnostics shares closed down 0.5p at 12.5p.