Date: 2014-10-03
Type of information: Termination of an agreement
Acquired company: Cosmo Pharmaceuticals (Italy) Cosmo Technologies (Ireland)
Acquiring company: Salix Pharmaceuticals (USA - NC)
Amount:
Terms: * On October 3, 2014, Salix Pharmaceuticals and Cosmo Pharmaceuticals announced that they have agreed to terminate their previously-announced merger agreement pursuant to which Salix would have combined with, and become a wholly-owned subsidiary of Cosmo Technologies Limited, a subsidiary of Cosmo. Under the terms of the termination, which is effective immediately, Salix will make a $25 million payment to Cosmo. Carolyn Logan, President and CEO of Salix stated, "When we announced our agreement to merge with Cosmo Technologies in July we believed the combination would generate significant value for our stockholders through the addition of key products to our development pipeline and a more efficient corporate structure that would enhance our profitability. Since then, however, the changed political environment has created more uncertainty regarding the potential benefits we expected to achieve. As a result, Salix and Cosmo have mutually agreed to terminate the proposed transaction. We look forward to a continuation of our long-standing relationship with Cosmo." Alessandro Della Cha, CEO of Cosmo stated, "The deal with Salix showed the potential of three products of ours for the US. The development path of the pipeline continued in the meantime, so this termination has no effect on value creation. Our focus is now on obtaining approval of SIC-8000 and filing Rifamycin SV and Methylene Blue NDA in the next months. While all strategic options are in our hands, we look forward to a continuation of our long-standing relationship with Salix". * On July 9, 2014, Salix Pharmaceuticals and Cosmo Pharmaceuticals announced a definitive merger agreement under which Salix will combine with Cosmo Technologies (Cosmo Tech), a subsidiary of Cosmo. Under the terms of the agreement, Salix will become a wholly-owned subsidiary of Irish domiciled Cosmo Tech, which will change its name to Salix Pharmaceuticals, plc and is expected to have its ordinary shares listed and traded on the NASDAQ Global Select Market. The transaction is expected to be modestly accretive to Salix’s earnings per share in 2016 and increasingly accretive thereafter. Upon completion of the merger, shareholders of Salix are expected to own slightly less than 80% of the ordinary shares of Salix Pharmaceuticals, plc and Cosmo is expected to own slightly more than 20% (20.1 %). Shareholders of Salix will receive one ordinary share of Salix Pharmaceuticals, plc in exchange for each share of Salix Pharmaceuticals, Ltd common stock they own at closing. In connection with the merger, Cosmo will continue to supply Uceris® to Salix and will also supply rifamycin MMX and methylene blue MMX. Additionally, Cosmo will have the right to designate one director to serve on the board of directors of Salix Pharmaceuticals, plc and will be subject to certain standstill provisions for at least 10 years following the completion of the merger. The transaction, which will be taxable to Salix’s shareholders, is expected to close in the fourth quarter of 2014. In connection with the transaction, Salix will also receive certain rights and protections under a Right of Negotiation and Non-Compete Agreement, which will: (1) give Salix a right of first negotiation with respect to all future products Cosmo or its affiliates seek to market in the U.S. in the GI space, and (2) prohibit Cosmo from competing directly with the combined company in the GI space in the U.S. These terms will apply as long as Cosmo is entitled to designate a director to serve on the board of directors of Salix Pharmaceuticals, plc. The current officers and members of the executive team of Salix will continue to serve in their respective capacities within Salix Pharmaceuticals, plc. Salix Pharmaceuticals, plc’s board of directors will consist of the current directors of Salix plus Alessandro Della Chá, as Cosmo’s initial designated board member. The transaction, which has been approved by the boards of directors of both Salix and Cosmo, is subject to approval by Salix’s stockholders and the satisfaction of certain closing conditions, including antitrust approval in the U.S. The transaction does not require the vote of Cosmo’s shareholders.
Details: This transaction intends to enhance Salix’s position as a leader in the treatment of gastrointestinal diseases and disorders and to expand its product development pipeline. It also establishes tax efficient corporate structure that enhances Salix’s acquisition strategy and organic growth. Salix Pharmaceuticals will own Cosmo’s U.S. patents for rifamycin MMX®, methylene blue MMX® and Uceris®, and have specified rights of negotiation with respect to all products Cosmo or its affiliates seek to develop or commercialize in the U.S. In addition, Salix Pharmaceuticals, plc will acquire Cosmo’s patents for rifamycin MMX in Canada, specified Latin American countries, India, China, Japan and the rest of the Far East, excluding Australia and New Zealand, and Cosmo’s patents for Uceris® in Japan. The deal will contribute to expand Cosmo \'GI pipeline and to accelerate development of monoclonal antibody infliximab MMX®. The antibody is used in Cosmo’s proprietary MMX® multi-matrix system technology that is designed to result in the controlled release in colonic environment. This biosimilar is currently under development and a phase 1/2 trial should begin in 2015.
Related: Gastrointestinal diseases
