Current Price: $0.0511
Offer Price: $0.0586
Expected Closing: beginning of June, 2020
Liquidity is limited.
On the 11th of May eye diagnostics company TearLab agreed to merge with health technology fund Accelmed Partners II (ref. AP) for $0.0586/share in cash (total consideration amount ~$736k). Shareholder approval has already been received and there seems to be no further major hurdles left.
AP has also agreed to invest $25m over two tranches, which will be triggered by delisting of TEAR and the company's senior lender, CRG, agreeing to restructure terms of the loan. The amendment agreement with a lender has already been made.
So overall, the buyer looks credible and it seems that the transaction should close shortly. Relatively large termination fee ($500k) is also somewhat reassuring here.
The opportunity likely exists simply due to the size of the company/transaction.
The buyer is a part of the Accelmed global group of funds that together manages $300m and specializes in small HealthTech companies. Their website states:
We are looking to partner with companies that have significant commercial infrastructure (>$20M LTM Revenue), an existing customer base and established sales channels, but that may lack new products and growth, and are interested in scaling and growing their businesses by gaining access to innovative products and growth capital. Accelmed Partners targets equity investments of $10-50M per transaction.
Accelmed Partners II fund is the newest fund of the group, which conducted a $400m offering in March'20 (results are not clear).
The target company seems to fit into the Accelmed's acquisition strategy.
TEAR is focused on commercializing its proprietary tear testing platform, the TearLab® Osmolarity System that enables eye care practitioners to test for Dry Eye Disease. Currently their system is sold in 40 countries (direct in US and through distributors in EU). The company consistently generates revenue above $20m, but despite that, it is not profitable and struggles to grow (revenue shrank by 7% on avg. for the last 3 years).