PETALUMA -- Former semiconductor production equipment maker Tegal Corp. (Nasdaq: TGAL) is taking a larger step in its new direction as a health care technology company with a deal announced today to acquire gene-based cancer care information provider CollabRx Inc. of Palo Alto and combine the two companies as CollabRx in San Francisco.

Part of the definitive agreement includes the planned appointment of CollabRx Chief Executive Officer James Karis as co-CEO with Tegal Chairman, President and CEO Thomas Mika of a combined, publicly traded company upon completion of the stock- and debt-based deal, according to the companies. Tegal plans to put the plan to a vote of shareholders in September."This acquisition marks both the successful conclusion of a transition process and the beginning of a new chapter for Tegal Corporation," said Mr. Mika. "We are excited to help drive the rapid growth of this market while we meet a critical and consequential human need. This is a mission Tegal's board has embraced wholeheartedly. I am very pleased to be working with James Karis as Co-CEO and fellow director, and look forward, along with the entire team at CollabRx and Tegal, to building a dynamic company in a new era of genomic medicine."

Tegal started in 1972 and grew to become a significant employer in Petaluma and a major maker of equipment used by manufacturers of computer chips and memory modules.

Over the past several years, the company has been in transition, at one point moving some operations to Silicon Valley. Instead, Tegal started backing away from the semiconductor industry, finally selling its remaining patents in recent months. The company reported $7.8 million in cash at the end of March, the close of its fiscal year.

Yet, Tegal's shift into another technology arena has been mixed. The company invested in green energy ventures, then put money into medical devices. Tegal's operations have scaled back from two larger buildings in south Petaluma to a smaller office downtown.

Under the acquisition agreement, Tegal w0uld issue 236,433 shares of common stock, representing 14 percent of Tegal's total shares outstanding prior to the closing, in exchange for all of CollabRx's capital stock. Tegal also will assume $500,000 of existing CollabRx debt through new five-year promissory notes to CollabRx noteholders. Tegal also would grant 368,417 restricted stock units and options as "inducement grants" to newly hired management and employees, subject to four-year vesting and other restrictions.

The price of Tegal stock shot up from $3.53 a share at the opening bell of trading Monday to as high as $6.11 and closed at $5.18.

Jay "Marty" Tenenbaum started CollabRx (www.collabrx.com) in 2008. It has been developing clinical advisory networks, expert systems, proprietary tools and processes and a pipeline of commercial data products and software applications for cancer treatment. The first commercial app is CollabRx Therapy Finder, which compiles medical tests, therapies and clinical trials for consideration in cancer treatment planning, focusing on a tumor's genetic profile.

"Medicine is entering a new era of low cost genome sequencing and the proliferation of personalized treatments based on specific genetic mutations," Mr. Karis said. "With the technology platform and expert system leadership position that CollabRx has developed over the past few years, we believe that the new company is in a position to lead the market for accurate, credible and current genomic information in the cancer space."