Omega aims to be alpha as it seals 'transformational' German deal

• Omega's 'transformational' deal will see it expand into the allergy testing market

Alva-based Omega Diagnostics has placed 7.75m worth of shares to fund the deal, which will be put before shareholders for approval next month.

Existing shareholders - including Legal & General, Octopus Investments and Williams de Bro - have signed up for the shares, with Omega's directors subscribing for 500,000 between them. New shareholders taking part in the placing include Matrix and Unicorn.

Aim-listed Omega already markets its food intolerance testing kits in more than 100 countries and plans to use its distribution network to sell allergy tests made by German firm Allergopharma. About 30 staff from the in-vitro diagnostics arm of the German firm will transfer over to Omega.

The takeover announcement was made yesterday at Medica, one of the industry's largest trade shows, in Dsseldorf.

Speaking from Germany, Omega group finance director Kieron Harbinson told The Scotsman: "We've had distributors in Latin America and other parts of the world asking us if we make an allergy testing kit to go alongside our food intolerance kits.

"Now we do. This is a big deal for us and its right that we now concentrate on integrating the two businesses."

Harbinson said the company was now looking at ways to use Allergopharma's library of 600 substances to which people might be allergic on its Genarrayt system and on a similar machine made by IDS, with which Omega has signed an initial partnership agreement.

David Evans, Omega's chairman and a well-known figure in the medical testing kit sector, is also chairman of IDS and made the initial introductions between the two companies.

But Harbinson said he was not involved in the deal, which had been approved by non-executive directors at both firms.

Harbinson added that 95 per cent of Allergopharma's products were currently sold in Germany, creating a large opportunity for expansion through Omega's distribution network.

The part of Allergopharma bought by Omega turns over about €4.3m (3.7m) and will become the largest part of Omega's enlarged business.

In July, the Scottish firm posted full-year profits for the year to 31 March of 590,000, up 9 per cent on the previous year. Turnover jumped by 14 per cent to 6.2m.

Allergopharma was set up in 1990 as a joint venture between pharmaceuticals giant Merck and Joachim Ganzer, a German entrepreneur.

The takeover is the latest in a series for Omega, which bought Devon-based Co-Tek - which makes diagnostic tests for bacterial diseases, including typhoid - in September 2009 after raising 1m in a share placing.Previous acquisitions included Genesis Diagnostics and Cambridge Nutritional Sciences, both in 2007.

Alistair Campbell, a partner in the corporate team at law firm Brodies, which advised Omega, said: "It is very satisfying to see corporates in Scotland able to raise sufficient funds in the equity markets to realise this kind of ambitious, strategic growth."