Key points:
- Omega Diagnostics’ share price surged 12.6% on the CD4 business update.
- The company has identified a preferred bidder to acquire its CD4 business.
- However, the firm did not release the financial details of the acquisition.
The Omega Diagnostics Group Plc (LON: ODX) share price surged 12.6% after announcing that it had signed a Heads of Terms agreement with a potential acquirer of its CD4 business as part of plans to sell the unit so that it can focus on its Health & Nutrition business.
The specialist medical diagnostics company had revealed its intention to sell the CD4 business on 13 May 2022 and had received several indicative offers since then. The company said it has now selected a preferred bidder, who has four weeks to complete the due diligence process, after which the deal will be completed.
Also read: Five Best Pharmaceutical Stocks To Watch In 2022.
Omega reassured investors that the due diligence process primarily involved the future owner of the CD4 business confirming the specifics of current business arrangements with customers and suppliers before acquiring the company.
The sale of the CD4 business will see the company dispose of its VISITECT® CD4 and VISITECT® CD4 Advanced Disease tests (the “CD4 Business”), which are manufactured by the unit.
Omega Diagnostics said it wants to unlock the significant potential in its Health & Nutrition business and will probably use some of the funds from the sale to grow the business. On the other hand, the company believes the CD4 business could do much better under a new owner with more resources to invest in product development and production capabilities.
Investors cheered the move, as evidenced by the rally in the ODX share price. Many hope the sale will unlock a new growth phase for Omega Diagnostics, whose shares are down 86.2% this year.
Jag Grewal, Omega Diagnostics CEO, commented: “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 Having withdrawn from the COVID-19 market and disposed of the Alva site earlier this year, the divestment of our loss-making CD4 business will leave the Group solely focused on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 & Nutrition division.”
*This is not investment advice. Always do your due diligence before making investment decisions.
Omega Diagnostics share price.
The Omega Diagnostics share price surged 12.58% to trade at 3.49p, rising from Friday’s closing price of 3.10p.
