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TORONTO,
Dec. 13, 2013 /CNW/ - Mercari
Acquisition Corp. ("Mercari" NEX: MV.H) is pleased to
announce that it, together with its wholly-owned subsidiary Mercari
Subco Inc. ("Mercari Subco"), has entered into a definitive
agreement dated December 13, 2013
(the "Amalgamation Agreement") pursuant to which Mercari
Subco will amalgamate (the "Amalgamation") with Concordia
Healthcare Inc. ("Concordia") to complete an arm's length
qualifying transaction (the "Transaction") in accordance
with the policies of the TSX Venture Exchange (the
"TSXV"). The Amalgamation is structured as a
three-cornered amalgamation and as a result the amalgamated
corporation ("Amalco") will become a wholly-owned subsidiary
of Mercari at the time of the completion of the Amalgamation.
The Amalgamation Agreement will be made available on SEDAR at
www.sedar.com. Mercari has received conditional approval from
the Toronto Stock Exchange (the "TSX") to have the common
shares of the Resulting Issuer (as defined below) listed for
trading on the TSX following the Transaction. Mercari
anticipates closing the Transaction on or about December 20, 2013.
About Concordia
Concordia is an
integrated healthcare company incorporated under the Business
Corporations Act (Ontario)
(the "OBCA") that targets three areas: (a) legacy
pharmaceutical products; (b) specialized healthcare distribution
that services the growing diabetic market; and (c) the acquisition
and/or development of orphan drugs. These three business units are
run as separate divisions but are inter-related. The cash-flow from
legacy pharmaceuticals is used to fund operations and is also
intended to fund the expansion of indications for potential orphan
drugs. The specialized healthcare distribution division
provides additional growth and cash-flow generation.
Additionally, through its registered pharmacy operation this
business is intended to provide a specialty distribution capability
for orphan drugs once acquired and/or developed. All three of these
divisions are operated through a corporate organization that
provides executive leadership, industry experience, financial and
capital markets experience, and an efficient tax structure.
Concordia operates out of
facilities in Oakville, Ontario,
Kansas City, Missouri and
Bridgetown, Barbados.
Concordia's
legacy pharmaceutical business was acquired in May 2013. Concordia's legacy pharmaceutical business
includes the management and acquisition of legacy pharmaceutical
products, both with patent life and exclusivity remaining
(pre-legacy) and products that have reached full maturity but
continue on a predictable revenue generation path, collectively
referred to as legacy products.
Concordia's
existing portfolio of legacy drugs (the "Existing
Portfolio") consists of Kapvay (clonidine extended release
tablets), Ulesfia (benzyl alcohol) Lotion 5% and Orapred ODT
(prednisolone sodium phosphate orally disintegrating tablets).
Concordia's
specialized healthcare division (the "SHD Division") was
acquired in October, 2013, with an effective date of August 1, 2013. The SHD Division is a
United States national Internet
and mail-order provider of diabetes testing supplies,
pharmaceuticals, diabetic shoes, orthotic braces and other home
medical equipment. The SHD Division operates primarily out of
office and warehouse facilities located near Kansas City, Kansas.
Concordia's
orphan drugs division is intended to provide growth opportunities
through the expansion into new indications for existing legacy
products or the acquisition of approved orphan drugs and further
expansion within their identified markets. In the initial execution
of its orphan drug strategy Concordia, through its subsidiaries, entered
into an agreement and plan of merger (the "Pinnacle Purchase
Agreement") on November 8, 2013
to acquire Pinnacle Biologics, Inc. ("Pinnacle"). The
legacy pharmaceutical product owned by Pinnacle has three oncology
indications approved by the FDA and is being developed for the
treatment of an additional rare form of cancer. Closing of the
Pinnacle Purchase Agreement is not a pre-condition to completing
the Amalgamation.
Summary of Financial Information for
Concordia
The following table sets forth selected
consolidated financial information for Concordia as of and from the date of
incorporation on December 5, 2012 to
the period ended September 30,
2013. Concordia's
first transaction was consummated on May 6,
2013. This information is derived from audited consolidated
financial statements for the period ended September 30, 2013 prepared in accordance with
International Financial Reporting Standards. All of the
following information is reported in US dollars.
US$ |
|
|
|
|
For the period ended September 30,
2013 |
|
|
|
Revenue |
|
|
|
$23,763,479 |
Net Income |
|
|
|
9,499,287 |
|
|
|
|
|
Basic earnings per share |
|
|
2.08 |
Diluted earnings per share |
|
|
1.63 |
|
|
|
|
Total Assets |
|
|
79,370,498 |
Total Liabilities |
|
|
59,727,063 |
Proposed Concordia Financing
Before the effective time of the Amalgamation,
Concordia proposes to complete a
private placement (the "Private Placement") of subscription
receipts (the "Subscription Receipts"). Pursuant to
the Private Placement, Concordia
will offer up to CDN$30,000,000 of
Subscription Receipts at a price of $6.25 per Subscription Receipt. Each Subscription
Receipt will be exchangeable for one common share of Concordia. Pursuant to the terms of the
Amalgamation Agreement, holders of Concordia common shares exchanged for the
Subscription Receipts will receive common shares of Mercari upon
completion of the Amalgamation (the "Resulting
Issuer") on the basis of one Resulting Issuer common share
for each Concordia common share
held. The completion of the Private Placement is not a
condition to closing the Transaction. In addition,
Concordia has granted an option to
the agents of the Private Placement (the "Agents") to
purchase up to an additional 15% of the number of Subscription
Receipts sold under the Private Placement on the same terms as
under the Private Placement.
The Agents will be entitled to receive a cash
commission equal to 6% of the gross proceeds from the Private
Placement (the "Agents' Commission") together with options
(the "Agents' Compensation Options") entitling the
Agents to subscribe for that number of common shares of Concordia
as is equal to 4.0% of the total number of Concordia common shares issued pursuant to the
exercise of Subscription Receipts under the Private Placement. Each
Agents' Compensation Option will be exercisable to purchase one
Concordia common share at the
price of CDN$6.25 per common share
for a period of 24 months from the date that the proceeds of the
Private Placement are released from escrow in accordance with the
terms of the Private Placement. The Agents' Compensation Options
will be exchanged for Resulting Issuer Options, pursuant to the
Amalgamation Agreement.
It is anticipated that the net proceeds from the
Private Placement will be used as follows:
Gross proceeds from the Private Placement |
|
|
$30 million |
|
|
|
|
Agents' Commission |
|
|
$1.8 million |
|
|
|
|
To be applied to Pinnacle acquisition |
|
|
$28.2 million |
Notwithstanding the foregoing, management of
Concordia and the Resulting Issuer
may determine that it is in the best interests of Concordia or the Resulting Issuer to allocate
the net proceeds of the Private Placement in a manner that is
different than the foregoing and the net proceeds may be allocated
accordingly. There may be circumstances, where for sound business
reasons, the reallocation of funds may be necessary in order for
the Resulting Issuer to achieve its stated business objectives.
About the Transaction
Mercari will hold a special meeting of its
shareholders on December 16, 2013 to
approve, among other things, (i) a change in the name of Mercari
from "Mercari Acquisition Corp." to "Concordia Healthcare Corp." or
such other name as is agreed to by Concordia and Mercari; (ii) the appointment of
the proposed directors for the Resulting Issuer; (iii) approval of
a stock option plan for the Resulting Issuer; (iv) a consolidation
of the common shares of Mercari on the basis of one (1)
post-consolidation Mercari common share for every 48.08
pre-consolidation common shares of Mercari; and (v) and a change in
Mercari's registered office address to the registered office
address of Concordia.
Details regarding the special meeting of the shareholders of
Mercari are available in a management information circular dated
November 11, 2013 that has been
provided to shareholders of Mercari. In addition, the
Amalgamation will be approved by the shareholders of Concordia by way of consent resolution prior
to the Amalgamation.
Pursuant to the terms of the warrant
certificates representing the Concordia common share purchase warrants (the
"Concordia Warrants"), the holders thereof may exercise the
Concordia Warrants by delivering to Concordia prior to the date of the
Amalgamation, a completed exercise form and payment of the
aggregate sum of $1.00. It is
intended that all of the issued and outstanding Concordia Warrants
will be exercised in such manner prior to the Amalgamation.
Under the terms of the Amalgamation Agreement,
at the effective time of the Amalgamation, among other things:
(a) |
each holder of Concordia common shares (except for Concordia
common shares held by holders that have validly exercised their
dissent rights in connection with the special resolution approving
the Amalgamation) shall exchange their Concordia common shares for
common shares of the Resulting Issuer instead of common shares of
Amalco, on the basis of one (1) fully paid and non-assessable
Resulting Issuer common share for every one (1) Concordia common
share held; and |
|
|
(b) |
subject to receipt of all required regulatory approvals, each
holder of options issued under Concordia's stock option plan (each
a "Concordia Option") or Agents' Compensation Options
outstanding immediately before the effective date of the
Amalgamation shall exchange each such Concordia Option or Agents'
Compensation Option, as the case may be, for one (1) option issued
under the Resulting Issuer's stock option plan (each a
"Resulting Issuer Option") with such Resulting Issuer Option
having the same terms as the Concordia Option or Agent's
Compensation Option, as the case may be, being exchanged, and each
such Concordia Option or Agents' Compensation Option shall be
cancelled. The exercise price for each Resulting Issuer common
share underlying the Resulting Issuer Option will be equal to the
exercise price per Concordia common share under the Concordia
Option or the Agents' Compensation Option, as the case may be, in
effect immediately prior to the Amalgamation on a
post-consolidation basis. |
The completion of the Amalgamation is
conditional on obtaining all necessary regulatory and shareholder
approvals in connection with the matters described above and other
conditions customary for a transaction of this type.
Immediately after the completion of the
Transaction, on a non-diluted basis and after giving effect to the
Mercari consolidation, the shareholders of Mercari will own
approximately 276,622 common shares of the Resulting Issuer and the
shareholders of Concordia will own
approximately 16,763,051 common shares of the Resulting Issuer
(assuming 5,520,000 Subscription Receipts are issued pursuant to
the Private Placement).
Terei International Limited, a corporation
incorporated under the laws of Hong
Kong, will, after giving effect to the Transaction,
beneficially own, control or direct, directly or indirectly,
approximately 3,072,500 common shares of the Resulting Issuer,
representing approximately 14.37% of the issued and outstanding
common shares of the Resulting Issuer on a fully diluted basis.
Mark Thompson, a resident of
Toronto, Ontario, will, after
giving effect to the Transaction, beneficially own, control or
direct, directly or indirectly, approximately 2,398,750 common
shares of the Resulting Issuer, representing approximately 11.22%
of the issued and outstanding common shares of the Resulting Issuer
on a fully diluted basis.
Arm's Length Transaction
The Transaction is an arm's length transaction
in accordance with the policies of the TSXV and is not subject to
Mercari shareholder approval.
Proposed Management and Board of Directors
of the Resulting Issuer
Upon completion of the Transaction, it is anticipated that the
persons identified below will serve as directors and officers of
the Resulting Issuer.
Mark Thompson - Chief
Executive Officer, President, Director
Mr. Thompson is the founder, CEO, President and
a director of Concordia. He
previously served as the former Senior Vice President and General
Counsel of Legacy Pharma Limited Partnership and was a co-founder
of Trimel Pharmaceuticals and Tribute Pharmaceuticals Inc.
From 2002 to 2005, Mr. Thompson was employed by Biovail Corporation
(currently Valeant), where he held the title of Vice-President,
Business Development and, before that, Associate General Counsel.
While at Biovail Corporation, Mr. Thompson was actively involved in
mergers and acquisitions transactions valued at over $2 billion. Prior to joining Biovail Corporation,
Mark was an associate at Osler,
Hoskin and Harcourt LLP. Mark holds an H.BA, and MA from
York University and an LL.B from the
University of Ottawa.
Leith Tessy -
Chief Financial Officer, Secretary-Treasurer
Mr. Tessy has 25 years of international
experience as a finance and operations executive. He has been
successful driving mergers and acquisitions transactions (with
total transaction value exceeding $1
billion), integrating acquired companies and expanding
operating margins. Previous roles held include: CFO then COO of LG
Nortel, a JV between Nortel Networks and LG Electronics based in
Seoul, South Korea (under Mr.
Tessy 's leadership, the company grew from approximately
$500 million to approximately
$1 billion, delivering 30% EBITDA
margin), CFO of Nortel Networks' Global Carrier Networks group (at
approximately $5 billion revenue,
Nortel's largest, most profitable division), and SVP Finance at
Nuance Communications (a highly acquisitive software company). Mr.
Tessy holds an Industrial Engineering degree from University of Toronto and an MBA from Ivey School
of Business, University of Western
Ontario.
John McCleery
- Managing Director, Chief Financial Officer (of Concordia Pharmaceuticals Inc. and Concordia
Laboratories Inc.)
Mr. McCleery is the Managing Director and CFO of
Concordia Pharmaceuticals Inc. and
Concordia Laboratories Inc., which are subsidiaries of Concordia. He has 30 years of international
experience as a senior financial and operational executive. He
developed and managed the Enterprise Risk Management and Compliance
program for Valeant Pharmaceuticals International Inc. (formerly
Biovail Corporation), reporting company risks to the board of
directors. Mr. McCleery chaired the Compliance Committee and the
Canadian Investment (RSP; DPSP) Committee. Mr. McCleery served as
Vice President and General Manager of Valeant Laboratories
(Barbados) SRL (formerly Biovail
Laboratories International SRL) the principal operating subsidiary
where he had responsibility for managing intellectual property,
treasury activities, research and development programs and business
partner relationships with Merck, Johnson and Johnson, Wyeth,
Forest and Teva etc. He was also a Director and Vice President,
Treasurer of Valeant Insurance Incorporated (formerly Biovail
Insurance Incorporated). Mr. McCleery served as Vice President,
General Manager and Chief Financial Officer of Trimel BioPharma SRL
and was responsible for all operational and financial management of
the principal operating subsidiary of Trimel Pharmaceuticals
Corporation. John is a Chartered Professional Accountant (CPA) and
a Chartered Accountant (CA) having earned his designations with the
Toronto office of
PricewaterhouseCoopers.
John Huss -
Director
After 20 years in the pharmaceutical and
biotechnology industry, Mr. Huss founded H&P Labs Inc., a
biotechnology company focused on early stages of drug development
(Phase I & II) in humans. Before that Mr. Huss was President
and CEO of Theratechnologies in Montreal. Since his return to Canada in 2010, he sits on the Board of
BioQuebec and since 2012 he also serves on its Executive Committee,
as Vice-President. Mr. Huss worked for sanofi from 1999 to 2010 in
Germany, Canada, Switzerland and France. He joined sanofi in 1999 as a Business
Unit Director for the German affiliate. In 2001, Mr. Huss joined
the Canadian affiliate as Vice-President, Sales and Marketing in
Toronto and moved to Montreal after the acquisition of Aventis. He
became General Manager of the Swiss affiliate of sanofi-aventis in
January 2007, based in Geneva. In August
2009, Mr. Huss joined the Head Office in Paris and worked next to the Chief Executive
Officer, Chris Viehbacher, as Chief
of Staff. Mr. Huss joined the pharmaceutical industry in 1990 and
for 6 years performed various Sales and Marketing functions for
Merck & Co. in the United
States, Germany and
Switzerland. In 1996, he was
offered a position with F. Hoffman-La
Roche as an Internal Product Manager at their Basel headquarters.
Ron Schmeichel
- Director, Non-Executive Chairman of the Board of
Directors
Mr. Schmeichel has 18 years of experience in
high-yield credit, leveraged loans, buy-outs and equity capital
markets in Canada and the US. For
the past 3 years, he has served as the President and CEO of Windsor
Private Capital, a firm that manages both credit and private equity
capital funds. The firm specializes in providing credit and equity
lines for management buy-outs, recapitalizations, bridge and
mezzanine loans and minority equity ownership to small/mid market
United States and Canadian
companies. Prior to this, Mr. Schmeichel was one of the founders
and partners of JJR Capital Corp., a Toronto based merchant banking firm that
specialized in reverse merger transactions on the TSXV. Since
Concordia's inception, Mr.
Schmeichel has served as the non-executive Chairman of the
Concordia board of directors as
well as a mergers and acquisitions advisor on six
pharmaceutical/healthcare transactions, including the two
foundational acquisitions that make up Concordia currently. Mr. Schmeichel has been
on the board of over 15 venture-listed public companies and has
served as a director and audit committee chair of one TSX-listed
company. For the past 12 years, Mr. Schmeichel has been a guest
lecturer at the University of Western
Ontario, Faculty of Law, as well as the Ivey School of
Business. He currently serves as a member of the Ontario Local Area
Committee to the Toronto Stock Exchange-Venture Group. Mr.
Schmeichel received a BA degree, with Merit, from York University in 1992 and a Juris Doctorate
degree from the University of Western
Ontario in 1995.
Doug Deeth -
Director
Mr. Deeth is a partner with the law firm of
Deeth, Williams & Wall LLP. He is the former President of the
Intellectual Property Law section of the Canadian Bar Association
and has 25 years of experience in the pharmaceutical industry.
Jordan
Kupinsky - Director
Since 2008, Mr. Kupinsky has been a Managing
Director with Windsor Private
Capital Inc. and its predecessor JJR Capital Corp. Prior to joining
Windsor, he was a Vice President
at Greenhill & Co., an independent global investment banking
firm, listed on the NYSE, focused on mergers & acquisitions and
financial restructuring from March
2006 to May 2008. Prior to
joining Greenhill, Mr. Kupinsky
held the positions of Vice President of Corporate Development and
General Counsel at Minacs Worldwide Inc., a publicly traded company
on the TSX from July 2002 to
February 2005. Mr. Kupinsky began his
career practicing corporate and securities law at Torys LLP in
Toronto (from 1997 to 1999) and
was also an investment banking associate at Houlihan Lokey Howard
& Zukin from 1999 to 2002. He holds a joint MBA and JD degree
from the Schulich School of Business and Osgoode Hall Law School at
York University. Mr. Kupinsky is
currently a director of Atlas Financial Holdings Inc. (AFH:NASDAQ)
where he chairs the audit committee. Mr. Kupinsky has served as a
director of companies on the TSX and on the TSXV, including having
served as a director of Xceed Mortgage Corporation from
May 2012 through July 2013 when the sale of Xceed to MCAN Mortgage
Corporation was completed.
Filing Statement
In connection with the Transaction and pursuant
to TSXV requirements, Mercari has filed a filing statement dated
December 13, 2013 (the "Filing
Statement") on SEDAR (www.sedar.com). The Filing
Statement contains details regarding the Transaction, the
Amalgamation, the Private Placement, Mercari, Concordia and the Resulting Issuer.
Sponsor
Concordia has
engaged GMP Securities L.P. and Canaccord Genuity Corp. (together,
the "Sponsors") as its sponsors in connection with the
listing of the common shares of the Resulting Issuer on the
TSX.
Completion of the Transaction is subject to a
number of conditions including, but not limited to, TSXV acceptance
and, if applicable pursuant to TSXV requirements, majority
of the minority shareholder approval. Where applicable, the
Transaction cannot close until the required shareholder approval is
obtained. There can be no assurance that the Transaction will
be completed as proposed or at all.
Investors are cautioned that, except as
disclosed in the filing statement to be prepared in connection with
the Transaction, any information released or received with respect
to the Transaction may not be accurate or complete and should not
be relied upon. Trading in securities of a capital pool
company should be considered highly speculative.
The TSXV has in no way passed upon the merits
of the Transaction and has neither approved nor disapproved the
content of this press release.
The Sponsors, subject to completion of
satisfactory due diligence, have agreed to act as sponsors in
connection with the listing of the common shares of the Resulting
Issuer on the TSX. An agreement to sponsor should not be
construed as any assurance with respect to the merits of the
transaction or the likelihood of completion.
* * *
This press release does not constitute an offer
to sell or the solicitation of an offer to buy any securities in
any jurisdiction.
ANY SECURITIES REFERRED TO HEREIN WILL NOT BE
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "1933 ACT")
AND MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES OR TO A U.S. PERSON IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE 1933 ACT.
Notice regarding forward-looking
statements:
This release includes forward-looking
statements regarding Mercari, Concordia, and their respective businesses,
which may include, but is not limited to, statements with respect
to the completion of the Transaction, the Private Placement and the
acquisition of Pinnacle, the terms on which the Transaction,
Private Placement and acquisition of Pinnacle are intended to be
completed, the use of the net proceeds from the Private Placement,
the ability to obtain regulatory and shareholder approvals and
other factors. Often, but not always, forward-looking statements
can be identified by the use of words such as "plans", "is
expected", "expects", "scheduled", "intends", "contemplates",
"anticipates", "believes", "proposes" or variations (including
negative variations) of such words and phrases, or state that
certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved. Such statements are based
on the current expectations of the management of each entity. The
forward-looking events and circumstances discussed in this release,
including completion of the Transaction, the Private Placement and
the acquisition of Pinnacle, may not occur by certain specified
dates or at all and could differ materially as a result of known
and unknown risk factors and uncertainties affecting the companies,
including risks regarding the pharmaceutical industry, failure to
obtain regulatory or shareholder approvals, economic factors, the
equity markets generally and risks associated with growth and
competition. Although Mercari and Concordia have attempted to identify important
factors that could cause actual actions, events or results to
differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events
or results to differ from those anticipated, estimated or intended.
No forward-looking statement can be guaranteed. Except as required
by applicable securities laws, forward-looking statements speak
only as of the date on which they are made and Mercari and
Concordia undertake no obligation
to publicly update or revise any forward-looking statement, whether
as a result of new information, future events, or
otherwise.
SOURCE Mercari Acquisition Corp.