AVACTA Group, the award-winning detection and analysis technology developer based at York Science Park, is poised to take over a major Oxford medical diagnostics firm for £3 million.

The York company has developed "the box" - amazing technology which can rapidly identify the nature of viruses used in germ warfare, instantly detect avian flue or be used as a medical diagnostic tool.

It is set to acquire Oxford Medical Diagnostics Ltd (OMD), which specialises in high sensitivity, laser-based gas detection technology - a spin-out from Oxford University in 2004.

Together, they bring the prospect of illness diagnosis using breath samples a step closer.

The deal, which involves the proposed issue of nearly 44 million ordinary shares of 0.1 pence each in the capital of Avacta at five pence per share, also entails a cash payment of £64,000 and the grant of options to subscribe for a further 14.8 million ordinary shares.

The share issue represents 5.6 per cent of Avacta's current issued ordinary share capital, and has yet to be cleared at the company's annual meeting next month. It also depends on tax clearance being obtained by the selling shareholders of OMD, expected by December 16.

AIMS-listed Avacta's planned expansion marks an honour- filled year for the plc, which won New Business Of The Year category in The Press Business Awards, 2006, then scooped the Recognition of Advancement accolade at the Yorkshire And Humber Bioscience Awards in September.

Professor Alastair Smith, Avacta's chief executive, said: "OMD is a perfect fit for us. It brings a highly complementary capability that has applications in our core markets of biopharmaceuticals, defence and healthcare and brings with it new routes to market for us in industrial process monitoring.

"The Oxford founders, led by Professor Graham Hancock, and the operational team are a huge asset to the wider group.

"The long-term goals of the two companies are also perfectly aligned - to provide value products for the lucrative clinical diagnosis market.

"Point-of-care health diagnosis is increasing in importance, driven by the need to effect more immediate treatments.

"We believe that the OMD technology, which has a well-protected position in this application area,will become an important tool for clinicians, helping to make breath diagnostics a routine method of health assessment in the future."