Multinational digital health firm Babylon reported its previously announced business combination with digital neurotherapy company MindMaze is not moving forward, and it will pursue the sale of its U.K. business to third parties and exit its U.S. business.

In June, the company revealed that it accepted a take-private proposal from AlbaCore Capital on behalf of its affiliate company MindMaze, which would see Babylon transition from a publicly traded company to a private entity and merge with MindMaze. The deal was expected to close in July. 

The companies were to form a global privately owned business offering a value-based AI-driven care platform, and the transaction would allow for a new capital structure to reduce Babylon's debt. The deal also included funding for Babylon's current business operations. 

In its announcement today, Babylon said it received funding from AlbaCore under its bridge notes facility but has no commitments for additional funds to continue its business operations and is, therefore, exploring strategic alternatives for its U.K.-based business. 

Alongside seeking a buyer for its U.K. business and closing its U.S. enterprise, the company will seek additional funding and continue to seek a buyer for its independent physicians association, dubbed Meritage Medical Network, which has been for sale since October. 

Should a third-party sale or additional funding not be secured, Babylon said it and its subsidiaries will be forced to file for bankruptcy protection or implement other alternatives, including Chapter 7 proceedings in the U.S. and/or "a U.K. administration for the applicable entities of the Group in the near term."

A third-party sale would be subject to AlbaCore's rights in its debt agreements, and full proceeds of any sale would not exceed the amount of debt owed to AlbaCore; therefore, Class A shareholders are not slated to receive proceeds from any such transaction. 

Babylon did not immediately respond to a request for comment. 

THE LARGER TREND

Babylon went public through a $4.2 billion special purpose acquisition company (SPAC) merger with Alkuri Global Acquisition in 2021. The company is still publicly traded on the NYSE with a stock price today of around $0.019. 

In November, the company announced it would proceed with a reverse share split of its Class A ordinary shares, aimed to boost its stock price to prevent it from being delisted.

In May, Babylon announced its plans to go private. It relayed it had entered into an agreement with AlbaCore Capital for a secured term loan facility for up to $34.5 million to support the company's plans to delist.