Cryo-Cell Rejects DW Healthcare’s Approximately $17M Acquisition Offer

Cord blood and menstrual flow banking firm says that it is not for sale.

Cryo-Cell has rebuffed a roughly $17.63 million takeover bid from DW Healthcare Partners. The equity group reportedly offered to pay $1.50 per share in cash, a 67% premium over the firm’s closing stock price the day the offer was made, according to Cryo-Cell.

The Cryo-Cell board of directors convened last week to review the proposal. After careful consideration they determined that it was inadequate and believe that it significantly undervalues the company and its growth prospects. The board reached the unanimous decision to reject the proposed offer and affirmed that it is not interested in selling the company at this time.

“Without exception, each member of the Cryo-Cell board believes that this is not the right time to sell the company,” states Mercedes A. Walton, chairman and CEO. “The board includes some of the company’s largest independent shareholders. We are unanimous and resolute in our commitment to maximize Cryo-Cell’s future value for all of our shareholders.”

Based in Oldsmar, Florida, Cryo-Cell has operated a cord blood banking service since 1992. The firm reports that it has nearly 215,000 clients worldwide, in addition to 21 global license affiliates.

In November 2007, Cryo-Cell launched Célle, the world’s first-ever commercial service allowing women to cryopreserve their own menstrual flow containing undifferentiated adult stem cells for future utilization by the donor or possibly their first-degree relatives in a manner similar to umbilical cord blood stem cells.

During fiscal 2009 the company executed technology license agreements for Célle with global partners in China, Thailand, Brazil, Italy, Germany, and Spain. These exclusive technology license agreements are expected to provide Cryo-Cell with future royalty fees from the processing and annual storage of menstrual stem cells.

The firm is advancing collaborative research partnerships to develop a range of regenerative therapeutic applications utilizing Cryo-Cell’s patent-pending stromal menstrual stem cell technology for possible future treatment of disorders such as stroke, diabetes, vascular regeneration, and breast cancer. Under the terms of these collaborations, which are funded by the company’s respective partners, Cryo-Cell is expected to own 50% of the intellectual property associated with therapies that may emerge from these R&D initiatives.

Consolidated revenues for the fiscal year ended November 30, 2009, were approximately $16.3 million compared to approximately $17.3 million for the fiscal year ended November 30, 2008. The company reported net income in fiscal 2009 of approximately $1.4 million, or $0.12 per basic common share, compared to a net loss of approximately $726,000, or $0.06 per basic common share, in fiscal 2008. The net income in fiscal 2009 is primarily the result of an 18% decrease in marketing, general, and administrative expenses and a 26% decrease in cost of sales compared to the same period in 2008.

As of May 31, the firm had $8.1 million in cash, cash equivalents, marketable securities, and other investments and, as of the end of the second quarter, no long-term debt.