Complementary Technologies Would Create
New Revenue Opportunities and Leader in Unique Medical and
Veterinary Products Including Rapid Medical Testing for Humans,
Animals and Food Safety Applications
Merger is Expected to be Accretive to
PositiveID Stockholders With $35-$40 Million in Combined
Revenue
PositiveID Corporation ("PositiveID" or the "Company")
(Nasdaq:PSID) announced today that it has presented an offer to the
Digital Angel Corporation ("Digital Angel") (Nasdaq:DIGA) board of
directors to purchase all the outstanding shares of Digital Angel
common stock for $0.60 per share, representing a 60 percent premium
to Digital Angel's average closing price for the 20 trading days
ending on September 14th. Based upon this price, PositiveID
proposes to exchange 0.67 share of its common stock for each
outstanding share of Digital Angel. The merger is expected to be
immediately accretive to PositiveID.
PositiveID believes the benefits of the proposed merger
include:
- Marketing synergies: PositiveID believes that its healthcare
development products and technologies would provide a new platform
for growth for Digital Angel's animal identification business and
differentiate it from its competitors. Digital Angel's animal
identification business currently has a limited product offering.
The Company believes its healthcare development products can be
used for animal health and food safety applications, particularly
its GlucoChip™ and virus detection system, making the combined
company a leader in animal health and food safety.
- Expanded product line: PositiveID believes that having a larger
product line would make it a more valuable supplier to its customer
base. The combination of PositiveID's healthcare products under
development, primarily focused on diabetes management and rapid
virus detection, combined with Digital Angel's animal
identification business, a long-established leader in the industry,
should make the combined company a more important vendor to its
customers due to an expanded product offering.
- Expanded intellectual property: The combined company's
portfolio of intellectual property would make it one of the leaders
in the sector, providing it with a platform to continue to develop
new products and enter strategic partnerships.
- Significant cost savings, accelerating the path to
profitability: PositiveID believes the proposed merger would
provide significant operating and financial synergies enabling the
companies to eliminate approximately $2 million in duplicative
costs.
- Improved competitive position through strengthened balance
sheet: As of June 30, 2010, PositiveID had cash and cash
equivalents of $5.4 million and no debt. The merger would also add
approximately $35 million in annual revenue to
PositiveID.
"We believe there are compelling benefits from the merger of
PositiveID and Digital Angel. Combining the two companies would
expand their product portfolios, increasing revenue opportunities
and making Digital Angel a clear leader in animal health solutions
and food safety, while simultaneously significantly reducing many
of the public company expenses that each company currently incurs,"
said Scott R. Silverman, Chairman and CEO of PositiveID. "We
believe the merger will not only provide operating synergies to
each business, but, importantly, provide greater value to the
respective companies' stockholders."
Below is the text of the letter that PositiveID sent to Digital
Angel's Board of Directors:
September 15, 2010
VIA EMAIL AND OVERNIGHT DELIVERY
Board of Directors Digital Angel Corporation 490 Villaume Avenue
South St. Paul, MN 55075 Attention: Daniel E. Penni, Chairman
Attention: Joseph J. Grillo, Chief Executive Officer
Dear Members of the Board:
I am writing to you, on behalf of the Board of Directors of
PositiveID Corporation ("PSID"), to outline the terms on which PSID
proposes to acquire all of the outstanding shares of capital stock
of Digital Angel Corporation ("DIGA"). Over the last several
months, we have made repeated attempts to engage in substantive
discussions with you concerning a business combination, and we have
been disappointed that you have not been willing to continue these
conversations. Specifically, you have advised that your Board
of Directors decided not to pursue further discussions despite an
offer representing a significant premium to DIGA's current market
capitalization. We believe strongly that a combination
between PSID and DIGA will offer significant value to DIGA and PSID
stockholders. We are writing this letter to demonstrate both our
enthusiasm for the proposed transaction and our commitment to
pursue a combination with DIGA.
We understand that you have focused on a reorganization plan for
almost 3 years now. Nonetheless, DIGA's price per share has
declined significantly (over 90%) during that time frame. We
believe that a business combination with PSID at this time would
result in superior benefits for DIGA stockholders, and that such
benefits can be achieved more completely and quickly than under
your continued reorganization plans, and with a higher degree of
certainty. A business combination with PSID now creates certain
value for DIGA stockholders (as further outlined below) and
eliminates the risks associated with your ongoing reorganization,
your continued Nasdaq-listing issues, and today's volatile business
and market environment. We believe that our proposal is superior to
any other alternative available to DIGA and its stockholders.
Subject to customary conditions and based on our review of
publicly available information relating to DIGA, we are prepared to
make an offer of $0.60 per share of DIGA, a 60% premium above the
closing of DIGA's common stock based on a 20 day average for the
period ending on September 14, 2010, and translates to an exchange
ratio of 0.67 shares of PSID for every outstanding share of
DIGA.
We are committed to pursuing our proposal because of the
significant opportunities that it will create for PSID as well as
for all stockholders of DIGA. Our proposal is based on the
following key elements:
- Compelling Valuation: As shown above, we are valuing DIGA at a
substantial premium to the recent and current stock price.
- Stock for Stock Exchange: Our proposal is to acquire all of the
outstanding shares in DIGA in exchange for shares of PSID, thereby
providing DIGA stockholders with improved liquidity, a premium of
60%, and an implied (additional) premium to PSID's current price
per share.
- Improved Balance Sheet: The resulting combined company will
have a stronger balance sheet than DIGA. PSID's Form 10-Q for
the period ended June 30, 2010 reflects cash of $5.4 million and no
debt.
- Ready to Proceed: Due to the complementary nature of DIGA and
PSID's business and based on the work we have already performed and
the resources we have committed, we are in a position to proceed
with the proposed combination on an expeditious basis.
- Operational Efficiencies: Eliminating redundant
infrastructure and duplicative operating costs will improve the
financial performance of the combined entity.
- Attractive Long-Term Solution for all Stockholders: Under the
proposed transaction, DIGA can focus on long-term value creation
within a better positioned organization. We believe that the
management and employees of DIGA are important to both the
integration of our businesses and the achievement of future
success. We plan to continue to invest in the people at DIGA and
therefore anticipate that there will be attractive career
opportunities for employees of DIGA at the combined
company. Customers will benefit as the combined company will
have an improved technology platform and will be able to offer an
expanded range of products and services to customers.
We also believe that this investment can significantly enhance
the value of PSID (which in turn will benefit DIGA stockholders) in
the following ways:
- DIGA brings a significant revenue stream (approximately
$35M).
- DIGA has complementary RFID and other identification
technologies that can open new markets for PSID's product
portfolio.
- A reunion of the key intellectual property that will create
opportunities in both the human and animal markets.
- Eliminating redundant infrastructure and duplicative operating
costs will improve the financial performance of the combined
entity.
We have a high regard for DIGA's management team and believe
that the management talent resident in our respective companies
will enable the combined company to enhance value for the
stockholders of the combined company. We look forward to discussing
with you how to optimize the integration of our respective
businesses and the best way to combine our management talent to
successfully lead the combined company.
We are prepared to meet with you and your management team at
your earliest convenience to commence discussions regarding our
non-binding proposal for a business combination. We need to conduct
only limited and confirmatory due diligence and will commit the
resources needed to be able to negotiate and enter into a
definitive merger agreement expeditiously. In addition, since
the merger consideration would consist of PSID common stock, we
would provide DIGA the opportunity to conduct appropriate limited
due diligence with respect to PSID. We are prepared to deliver
a draft merger agreement to you and begin discussion
immediately.
In light of the significance of this proposal to your
stockholders and ours, as well as our desire to avoid selective
disclosures, we plan to release publicly the text of this letter
tomorrow morning.
Due to the value represented by our proposal, we expect the DIGA
Board to engage in a full review of our proposal. We believe
our proposal offers substantial value to the stockholders of both
companies as outlined above, and we are committed to undertaking
the necessary steps to seeing this transaction to
completion. My leadership team and I would be happy to meet
with you and your Board at your earliest convenience. We hope that
you and your Board share our enthusiasm and look forward to a
prompt and favorable reply.
I look forward to discussing this with
you.
Very truly yours,
/s/ Scott R. Silverman Scott R. Silverman Chairman and
Chief Executive Officer
About PositiveID Corporation
PositiveID Corporation develops and markets healthcare and
information management products through its RFID-based diagnostic
devices and identification technologies, and its proprietary
disease management tools. PositiveID operates in two main
divisions: HealthID and ID Security. For more information on
PositiveID, please visit www.PositiveIDCorp.com.
The PositiveID Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7717
Statements about PositiveID's future expectations, including,
that (i) the merger is expected to be immediately accretive to
PositiveID stockholders with $35-$40 million in combined
revenue, (ii) PositiveID's healthcare development products and
technologies would provide a new platform for growth for Digital
Angel's animal identification business and differentiate it from
its competitors, (iii) PositiveID's healthcare development products
can be used for animal health and food safety applications,
particularly its GlucoChip™ and virus detection system, making the
combined company a leader in animal health and food safety, (iv)
having a larger product line would make it a more valuable supplier
to its customer base, and the combination of PositiveID's
healthcare products under development combined with Digital Angel's
animal identification business should make the combined company a
more important vendor to its customers due to an expanded product
offering, (v) the proposed merger would provide significant
operating and financial synergies enabling the companies to
eliminate approximately $2 million in duplicative costs, (vi) that
the merger would also add approximately $35 million in annual
revenue to PositiveID, (vii) combining the two companies would
expand their product portfolios, increasing revenue opportunities
and making Digital Angel a clear leader in animal health solutions
and food safety, while simultaneously significantly reducing many
of the public company expenses that each company currently incurs,
(viii) the merger will not only provide operating synergies to each
business, but, importantly, provide greater value to the respective
companies' stockholders, and all other statements in this press
release other than historical facts are "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, Section 21E of the Securities Exchange Act of 1934, and as
that term is defined in the Private Litigation Reform Act of 1995.
Such forward-looking statements involve risks and uncertainties and
are subject to change at any time, and PositiveID's actual results
could differ materially from expected results. Additional
information about these and other factors that could affect the
Company's business is set forth in the Company's various filings
with the Securities and Exchange Commission, including those set
forth in the Company's 10-K filed on March 19, 2010, and the
Company's 10-Qs filed on May 6, 2010 and August 13, 2010, under the
caption "Risk Factors." The Company undertakes no obligation to
update or release any revisions to these forward-looking statements
to reflect events or circumstances after the date of this statement
or to reflect the occurrence of unanticipated events, except as
required by law.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. In connection with the proposed transaction,
PositiveID plans to file with the SEC a registration statement on
Form S-4 containing a proxy statement/prospectus and other
documents regarding the proposed transaction. The definitive proxy
statement/prospectus will be mailed to stockholders of Digital
Angel Corporation. INVESTORS AND SECURITY HOLDERS OF
DIGITAL ANGEL ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND
OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain free
copies of the registration statement and the proxy
statement/prospectus (when available) and other documents filed
with the SEC by PositiveID through the Web site maintained by the
SEC at http://www.sec.gov. Free copies of the registration
statement and the proxy statement/prospectus (when available) and
other documents filed with the SEC can also be obtained by
directing a request to Investor Relations Department, PositiveID
Corporation, 1690 South Congress Avenue, Delray Beach, Florida
33445.
PositiveID and its directors and executive officers and other
persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information
regarding PositiveID's directors and executive officers is
available in its Annual Report on Form 10-K for the year ended
December 31, 2009, which was filed with the SEC on March 19, 2010.
Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement/prospectus and other relevant materials to be
filed with the SEC when they become available.
CONTACT: PositiveID Corporation
Allison Tomek
561-805-8000
atomek@positiveidcorp.com
CEOcast
Dan Schustack
212-732-4300
dschustack@ceocast.com
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