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Nanogen to Merge with French Dx Firm Elitech in Reverse Acquisition

NEW YORK (GenomeWeb News) – Nanogen said today after market close that it has signed a merger agreement with Paris-based diagnostic firm the Elitech Group that is structured as a reverse acquisition of Nanogen by the privately held Elitech.
Under the terms of the agreement, Nanogen said that Elitech shareholders are expected to receive shares of Nanogen common stock valued at €66.5 million ($98.5 million).
As of Thursday evening, Nanogen had a market capitalization of $32.8 million and its shares were trading at $.44. A Nanogen spokesman said the company will issue new shares to cover the balance of the value of the purchase agreement.
The name of the combined company has not yet been determined, but it will continue to be listed on the Nasdaq exchange, Nanogen said. The combined company will be headquartered in San Diego, where Nanogen is currently based.
The company said that the merger, expected to close in the first quarter of 2009, will combine Nanogen's experience in molecular and point-of-care diagnostics with Elitech’s global manufacturing, sales, and distribution of IVD products for the clinical chemistry and microbiology markets.
Expected first-year revenues for the combined firm will be more than $150 million.
Elitech Group has around 260 employees. For the fiscal year ended March 31, 2008, it posted revenue of €47.5 million ($70.4 million).
Nanogen reported revenues of $38.2 million for its 2007 fiscal year and has forecast full-year 2008 revenues of approximately $48 million.  
The merged company is expected to benefit from “significant operational synergies,” Nanogen said, including cost reductions in sales, marketing, manufacturing, and development.
As part of the agreement, Nanogen has also entered into an interim funding agreement with Elitech and “certain existing Nanogen investors” under which they will loan Nanogen $8 million to fund operations prior to the close of the acquisition.
In exchange, Nanogen will issue senior secured convertible promissory notes that are convertible into shares of Nanogen stock at the closing bid price immediately preceding the signing of the interim funding agreement.
Nanogen said that the boards of directors of both companies unanimously approved the merger agreement.
Pierre Debiais, president of Elitech, will serve as CEO. Howard Birndorf, Nanogen's chairman and CEO, is “expected” to serve as chairman of the combined entity.
Michael Saunders, group vice president of marketing and business development for Elitech, will become COO, with a focus on European business and global commercial operations. David Ludvigson, president and COO for Nanogen, will also serve as COO, with a focus on the US business and global business and finance.
Nick Venuto, currently vice president and CFO of Nanogen, will serve in the same capacity for the combined entity.
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