By Scott Wright
OMEGA Diagnostics has found a buyer for its CD4 business, which manufactures disposable point-of-care tests for people living with HIV.
The company declared yesterday that it had agreed heads of terms with an anonymous selected bidder for the CD4 business, after receiving a number of indicative offers. It expects to receive a “significant up-front cash payment and a future royalty stream linked to Visitect CD4 test sales” when the deal concludes, which it said would be “shortly”.
Omega said the preferred bidder has been given four weeks to complete the rest of its due diligence, noting that this will mainly comprise “commercial discussions of a confirmatory nature with key customers and suppliers”.
The development marks the latest stage in reshaping the operations of the company, which is relocating to Cambridgeshire following the sale of its Alva headquarters to Accubio, a subsidiary of China’s Zhejiang Orient Gene Biotech, earlier this year. Around100 staff transferred to Accubio following the deal, which ended Omega’s 19-year connection to the town.
The sale followed a bruising experience for Omega after a move into manufacturing Covid testing kits. It stands by legal advice that no monies are due to the Department of Health and Social Care following its demand for the repayment of £2.5m given to Omega last year to ramp up Covid test manufacturing capacity at Alva. Omega was not allocated a Covid test contract.
Selling the CD4 business will leave Omega to focus solely on its health and nutrition business, which it said offers “significant growth opportunities”.
Chief executive Jag Grewal said: “We were delighted by the level of interest we have received for the CD4 business and look forward to announcing the completion of the transaction in due course. Having withdrawn from the Covid-19 market and disposed of the Alva site earlier this year, the divestment of our loss-making CD4 business will leave the group solely focused on our higher-margin health and nutrition division. The net proceeds from the sale of the CD4 business will enable our product and geographical expansion ambitions to be realised.”
Bank of Scotland has extended Omega’s £2m overdraft by three months until September 30, giving the company “sufficient time to reassess the funding requirement for its profitable and higher-growth health and nutrition division.”
Shares closed up 6.4% at 3.3p.
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