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Warning Possible Insolvency, Chembio Diagnostics Urges Shareholders to Accept Biosynex Acquisition

NEW YORK — Chembio Diagnostics on Wednesday urged its shareholders to accept a tender offer for their stock issued by French rapid diagnostics maker Biosynex as part of an acquisition agreement between the companies, warning that Chembio could go out of business if the deal doesn't close.

Early last month, the companies — which both develop, manufacture, and market point-of-care diagnostic tests for use by healthcare professionals and for over-the-counter use — agreed to a $17.2 million all-cash acquisition deal under which Biosynex would buy all outstanding shares of Chembio at $.45 apiece, representing a 27 percent premium over the stock's closing price as of Jan. 30.

While the tender offer was set to expire at midnight on Wednesday morning, Biosynex has extended it to March 28. In a letter to its stock owners on Wednesday, Chembio President and CEO Richard Eberly reiterated the company's recommendation that they tender their shares.

He noted that Chembio is currently unable to meet pending debt obligations, which could force it into bankruptcy or a restructuring that could be dilutive to shareholders. Eberly also said that the Hauppauge, New York-based company is facing a potential Nasdaq delisting and that net losses and a lack of liquidity raises substantial doubt about its ability to continue as a going concern.

"I believe Chembio is at a critical juncture," Eberly wrote, and "reiterate the board's recommendation for stockholders to tender their shares."