Why Did CLRO Stock Surge More Than 170% Today?

• In October last year, ClearOne divested its legacy assets to Biamp as part of a strategic pivot into the medical technology field.
• At the end of the transaction, former ClearOne shareholders will own about 12.7% to 14.4% of the new entity.
• Additionally, ClearOne is also looking to raise up to $15 million concurrently with the closing of the deal.

Shares of ClearOne (CLRO) skyrocketed on Thursday after the company announced a reverse merger agreement with Vivani Medical’s (VANI) unit Cortigent.

At the time of writing, CLRO stock was up more than 170%.

Why Is CLRO Reverse Merging With Cortigent?

ClearOne used to be in the communications equipment business, primarily dealing in audio and video conferencing products. In October last year, the company divested its legacy assets to Biamp as part of a strategic pivot into the medical technology field.

The company is currently serving as a public vehicle for Cortigent, which is developing brain-implant devices to help patients recover critical bodily functions.

“I am excited to announce this transaction. In my view, Cortigent's mission, to help patients recover sight and motor function through precision neurostimulation, is compelling given both the technical outlook for their neurostimulation technology and the significant unmet market needs that this technology seeks to address,” said ClearOne Chairman Eric Robinson.

Terms Of The Deal

Under the terms of the deal, Vivani will receive 12.5 million shares of ClearOne and gain a controlling stake of between 59.4% and 67.5% in the combined entity, while former ClearOne shareholders will own about 12.7% to 14.4% of the company.

Cortigent will be the surviving entity in the transaction, with the combined entity renamed Cortigent Holdings, Inc., the Nasdaq ticker symbol changing to “CRGT,” and a newly appointed board of directors.

Additionally, ClearOne is looking to raise up to $15 million concurrently with the closing of the deal, which will “give the combined company a strong foundation to move its pipeline forward.”

The transaction is expected in the third quarter of this year.

What Retail Traders Think About CLRO

On Stocktwits, retail sentiment toward the stock turned ‘extremely bullish’ from ‘bearish’ over the last 24 hours.

CLRO shares have gained 79% this year.

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