Reverse merger lets company go public
01/01/2006
Who says nano companies can’t go public? Maybe they just can’t take the ordinary route. NaturalNano Inc., a Rochester, N.Y.-based nanomaterials company, began trading under the symbol NNAN in early December on the over-the-counter bulletin board system. The merger was accomplished by virtue of an existing public company, Cementitious Materials Inc., acquiring the privately held NaturalNano Inc. The new, combined company is called NaturalNano Inc.
 NaturalNano CEO Michael Riedlinger says his company's strategy is to become a specialty materials player. |
There were three major reasons for taking the reverse merger route, argued Michael Riedlinger, NaturalNano’s chief executive. The first, he said, is “it’s a real differentiator to be a publicly traded nanotechnology company.” When calling on potential clients, he said, being public gives him additional credibility.
The second, he said, was that a public company generally can raise additional cash on more favorable terms than its privately held counterparts. That may prove helpful later on when the company seeks more cash to expand.
And third, Riedlinger said, having one’s own currency provides the possibility of making acquisitions down the road without using cash, though he said such a strategy is not currently among his plans.
As for the way Riedlinger took his eight-person company public, he said that while a reverse merger certainly lacks the glamour of doing an initial public offering on the Nasdaq, it was a way he “could get public relatively quickly.” Shortly prior to the merger, NaturalNano completed a $4.2 million funding round that included mostly individual investors as well as German nanotech private equity firm Nanostart AG.
Next up is securing customers, Riedlinger said. The company is trying to find markets for what it calls naturally occurring nanotubes - halloysite clay mined by a partner in Utah. While Riedlinger thinks it will take two to three years to ramp up to large volume shipments, he said there may be some nearer-term opportunities improving the strength and fire retardance of polymer materials.
“There is also a fair amount of interest in RF shielding for composites,” he said. “Our view is that the RF shielding area is going to be higher margin.” To that end, he said he’s looking to break into aerospace where lightweight materials with high strength catch a premium.
- David Forman