Digital Angel Selling McMurdo Unit to Orolia Group

Digital Angel, an advanced technology company in the field of animal identification and emergency identification solutions, announced that it has entered into a definitive agreement to sell its McMurdo unit in the United Kingdom for $10 million cash.

The purchaser is France-based Orolia Group, a high-technology firm specializing in positioning, navigation and timing solutions for critical operations.

Joseph J. Grillo, Digital Angel's Chief Executive Officer and President, said, "This transaction marks an important step towards focusing Digital Angel on a single core business, simultaneously giving us the ability to pay off our term debt and improve our working capital position. Digital Angel's Board of Directors and management team have made the strategic decision to focus the company on our Animal ID business, Destron Fearing, which we intend to grow both organically and by acquisition going forward."

The key terms of the transaction are as follows:

- $10 million cash consideration

- $1.5 million to be held in escrow for up to 12 months to cover post-closing claims, warranties or indemnities

- Closing to take place upon satisfaction of closing conditions, targeted for November 20

- Structured as a cash-free, debt-free sale of assets

- Break-up fee of $500,000 payable by either party to the other, if a party fails to close when all conditions are satisfied

Grillo said, "Though we have had a lot of success recently in the Emergency ID beacon business, we believe that the long-term market drivers in the animal identification industry, and the traditional position Destron Fearing has had as a core of Digital Angel's business, make Animal ID the best business segment to focus on going forward. Rather than divest all of UK-based Signature Industries Limited at this time, we chose to divest McMurdo to take advantage of its value, and to continue the positive momentum that exists in SARBE as we execute on the UK Ministry of Defense PELS (Personal Emergency Locator System) contract. We will continue to look at ways to maximize shareholder value in the future with the appropriate positioning of the SARBE and the Clifford & Snell Alarms product lines that still make up the Signature Industries Limited legal entity in the UK.

"We will be hosting a conference call this afternoon to discuss the transaction in more detail and to answer your questions. We invite all interested parties to join us on this call."

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