Digital Angel Corporation's stockholders have approved the sale of the company's animal identification subsidiary, Destron Fearing Corporation.
South St. Paul-based Digital Angel announced in May that it planned to sell the subsidiary to Dallas-based Allflex USA, Inc., for $25 million. But the plan was subject to shareholder approval.
Shareholders voted Thursday, and the required majority of outstanding shares favored the sale, Digital Angel said. The sale is expected to close on July 22.
After the deal is completed, Digital Angel will issue a special cash dividend to investors, although the company didn't specify the amount of the dividend.
CEO Joe Grillo said in a statement that the sale will allow Digital Angel to operate its remaining business "with improved balance sheet liquidity and virtually debt-free."
Digital Angel's May decision to sell Destron Fearing came as somewhat of a surprise. Less than three months earlier, it said that it planned to focus on that business.
"After exploring all available alternatives and reviewing a number of scenarios with AgriCaptial Corporation, an investment bank hired to evaluate the value of the business and advise the board of directors on its strategic options, it was determined that selling Destron Fearing was the best solution to maximize the value of the business for Digital Angel's stockholders and provide the best opportunity for Destron Fearing employees, partners, and customers," Grillo said in a statement issued in May.
In September, Digital Angel rejected a $17 million buyout offer from Delray Beach, Florida-based PositiveID Corporation. At the time, the company described the offer as "inadequate" and "highly opportunistic" and said that it did not "accurately reflect the value of a company with a annual revenue stream of $35 million to $40 million."
Then in February, Digital Angel said that it had secured $2 million in short-term financing so that it could "focus on Destron Fearing." The company said that it would divest "non-core" businesses in 2011 in order to make Destron Fearing its priority.
Destron Fearing makes implantable microchips for use in companion pets, livestock identification and traceability solutions, microchips for horses, and transponder tags for salmon fisheries.
Allflex designs and manufactures animal identification systems for livestock. The company makes electronic tags-which are currently used in more than 1 million head of production livestock animals-and ear tags.
Digital Angel is among Minnesota's 100-largest public companies based on revenue, which totaled $37.7 million in 2010.