Digital Angel Corporation announced Tuesday that it has rejected a $17 million buyout offer by PositiveID Corporation.

Delray Beach, Florida-based PositiveID, a former Digital Angel subsidiary, made an offer to purchase the South St. Paul-based company earlier this month.

Digital Angel's board of directors unanimously rejected the proposal, and the company described the offer as “inadequate” and “highly opportunistic.” Digital Angel claims that the move was an attempt to take advantage of its low stock price, which stems from news that Digital Angel faces delisting from Nasdaq.

PositiveID offered an equivalent of 60 cents per share for the company-a 60 percent premium to the company's average closing price for the 20 days preceding the September 17 offer.

Upon receiving the offer, Digital Angel announced that its board would review it at the company's next regularly scheduled meeting-an announcement that sparked a statement from PositiveID urging the company to schedule a special meeting to consider the proposal. PositiveID said in a September 17 statement that it was disappointed that the company “does not appear to be considering our offer with the urgency we believe it merits.”

Digital Angel said that the proposed offer-valued at about $17 million-“does not accurately reflect the value of a company with an annual revenue stream of $35 million to $40 million.” The company also contends that the offer doesn't account for recent growth or “the intrinsic benefits of ongoing restructuring tactics.” In addition, Digital Angel cited concern with PositiveID's offer of “volatile, undesirable security” as opposed to an all-cash transaction. The Florida company had offered 0.67 shares of its own stock for each share of Digital Angel.

Digital Angel said that its board has received “other informal indications of interest”-which could include offers to purchase the company-that it has deemed more attractive. The company is currently working with a financial advisor to value the company and to explore all alternatives, including the prospect of maintaining its independence.

In a Tuesday letter to PositiveID's board, Digital Angel said that the offer “presents an unnecessary level of business risk” and is not in the best interest of its shareholders.

PositiveID responded to Digital Angel's letter in a Wednesday news release. “PositiveID believes that its proposal offered a compelling opportunity for Digital Angel stockholders that would create significant stockholder value for both companies and expects that any independent analysis will support its contention,” the company said. “Once Digital Angel discloses its financial advisor, it expects to engage such party in discussions. PositiveID does not anticipate increasing its offer from its current level, as it believes it represents the most attractive alternative for Digital Angel stockholders.”

Digital Angel is among Minnesota's 80 largest public companies based on its revenue, which totaled $49.5 million in revenue in 2009.