Rosetta Genomics Ltd. (Nasdaq:ROSG) has sued spin-off Rosetta Green Ltd. (TASE: RSTG), a month after it announced the sale of its activities to Monsanto Company (NYSE: MON) for $35 million. Rosetta Genomics, the former controlling shareholder in Rosetta Green, will see no money from the sale, and it is demanding its share. Rosetta Green counters that the lawsuit is baseless.
Rosetta Genomics spun off Rosetta Green in 2008 to use the company's micro RNA technology for crop bioengineering. The companies parted ways in 2010, and Rosetta Green went public on the TASE. Financially troubled Rosetta Genomics, which owned almost half of Rosetta Green, later sold its stake for just $900,000, plus up to $2 million in milestone payments, to Plan B Ventures and Alexander Rabinovitch. Rosetta Genomics retained first refusal rights to the sale of the shares to a third party under the founding agreement of Rosetta Green.
Rosetta Genomics argues that Rosetta Green may not transfer to Monsanto the intellectual property given by Rosetta Genomics when it founded Rosetta Green. It also claims 7.5% of the sale proceeds, and that Monsanto should assume Rosetta Green's liabilities under the licensing agreement with Rosetta Genomics, to which Rosetta Green is bound.
Rosetta Green counters that Rosetta Green's software is not being transferred under the sale of its assets to Monsanto, that Rosetta Genomics is not entitled to royalties as part of a transaction of this kind, and that Monsanto is assuming Rosetta Green's relevant liabilities to Rosetta Genomics under the licensing agreement. Therefore, Rosetta Green is not required to provide any guarantees.
I just learned of the Rosetta Green sale and am very disappointed to learn ROSG shareholders were screwed in the deal. I always thought there might even more value in Grreen than the parent because of the lack of regulation in the plant industry. Monsanto saw the value and grabbed it on the cheap. These kinds of things happen to cash-strapped companies all the time and may continue to happen to ROSG due to inadequate capitalization. The science is there, but the capital isn't. Sad. Peter
The real story is that ROSG sold their share of the company for about $3 million (best case.) Monsanto paid roughly $17 million for that same share. Is there any doubt that the management of this company is incapable of extracting value out of their technology?
This was a slimy deal by Rosetta Green to screw ROSG out of their milestone payment. I’m not surprised to see ROSG taking them to court.
If I remember the announcement, it read that Monsanto was only buying Rosetta Green's activities, not the complete company. What kind of #$%$ is that? Buy all the company activities essentially leaving only the shell of Rosetta Green. Clearly this agreement was designed for one purpose, screw us.