Jul. 15--Shares of Eagan-based Biotel dropped more than 50 percent Tuesday on word that Pennsylvania-based CardioNet is terminating a merger agreement with the local company.

Biotel, a medical device firm that makes external heart monitors, said in a statement that it is considering legal options.

"CardioNet has advised Biotel that it is terminating the merger agreement with Biotel due to a failure of Biotel to comply with the terms of the agreement," Biotel said in a statement Tuesday. "Biotel believes it has complied with all terms of the agreement and that CardioNet's claim is without merit and inconsistent with CardioNet's representations to Biotel."

A CardioNet spokeswoman did not return a call seeking comment.

In April, CardioNet said it would acquire Biotel for $4.82 per share in cash, making the deal worth about $14 million. Prior to the announcement, Biotel shares were trading for $1.78.

Biotel shares closed Tuesday at $2.22 -- down 53 percent for the day.

The acquisition was meant to expand CardioNet's portfolio of heart rhythm monitor products.

Under the terms of the merger agreement, Biotel must pay a termination fee of $1 million plus expenses of up to $400,000 to CardioNet under certain circumstances. But Judy Naus of Biotel said Tuesday that such a demand "has not been asserted as far as I know."

Biotel employs 50 people. It posted $11.5 million in revenue for the 2008 fiscal year ended June 30.

Christopher Snowbeck can be

reached at 651-228-5479.

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