ProPhase Labs stock soars after announcing reverse merger with ABL

Investing.com -- ProPhase Labs Inc (NASDAQ:PRPH) stock surged 75.2% in premarket trading Friday after the company announced a non-binding letter of intent for a reverse merger with Advanced Biological Laboratories S.A. (ABL), a European biotechnology and MedTech group.

The proposed transaction would make ABL the majority owner of the combined entity, with ABL shareholders expected to own approximately 76% of the company at closing. The preliminary framework values ProPhase’s legacy business at up to approximately $30 million.

As part of the deal, ProPhase may declare a special cash dividend of up to $10 million to current shareholders. Additionally, all Crown Medical Collections receivables, with anticipated net collections of approximately $50 million, would be carved out exclusively for current ProPhase shareholders.

"This LOI represents what we believe is one of the most important strategic developments in ProPhase Labs’ history," said Ted Karkus, Chief Executive Officer of ProPhase Labs. The deal aims to deliver near-term value to existing shareholders while positioning ProPhase within ABL’s global infrastructure.

Following the merger, a new U.S. subsidiary would operate ProPhase’s Nebula Genomics platform, BE-Smart Esophageal Cancer Test program, and select consumer health businesses. This subsidiary is expected to remain under ProPhase’s current management team.

The combined company would assume approximately $5 million of ProPhase’s existing debt, with all other legacy liabilities remaining with ProPhase Labs.

The parties anticipate working toward definitive documentation within 60 to 90 days. The transaction remains subject to due diligence, regulatory approvals, Nasdaq listing requirements, and other closing conditions.

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