Medtronic, a U.S. medical device company, is reportedly seeking to acquire EOflow, a Korean company specializing in wearable insulin pumps.
According to Aju Business Daily, EOFlow is said to have selected Credit Suisse as the organizer of the sale.
"Rumor is circulating that Medtronic has entered the due diligence stage," an investment banking official was quoted by Aju Business Daily as saying. "The due diligence process entails costs and proves that Medtronic is reviewing the acquisition of EOFlow."
Although the exact details of the transaction are not known due to the nature of the private transaction, industry watchers speculate that Medtronic will seek to acquire shares EOFlow CEO Kim Jae-jin, who is the largest shareholder of EOFlow. Kim holds an 18.58 percent stake in the company.
Industry watchers speculate that a third-party allocation paid-in capital increase to acquire the new shares is also a possibility.
EOFlow was unavailable for comments.
EOFlow has recently been suffering a cash crunch, with the company's cash reserve reportedly below 10 billion won ($7.6 million) as of September of last year.
As a result, the company issued convertible bonds worth 32 billion won.
The bonds have a maturity date of February 2028, and will be convertible to around 1.4 million new shares or existing registered shares.
As of 2:40 p.m. on Wednesday, the company's shares stood at 22,150, down 0.67 percent from the previous trading day.