Auxilium Pharma And QLT To Merge

(RTTNews) - Auxilium Pharmaceuticals Inc. (AUXL), a fully integrated specialty biopharmaceutical company, and QLT Inc. (QLTI, QLT.TO) entered into a definitive agreement under which Auxilium plans to merge with QLT.

The transaction has been unanimously approved by the Boards of both companies.

As a result of the merger, Auxilium said it expects to have an expanded corporate platform that includes focused investments in research and development and the continued pursuit of new products and M&A due to cost and tax synergies.

The companies also intend to continue to pursue a potential partnering agreement for QLT's promising late-stage retinoid program.

As per the terms of the agreement, a wholly-owned subsidiary of QLT will be merged with and into Auxilium. QLT will remain incorporated in British Columbia, Canada, and will be renamed "New Auxilium." Current shareholders of Auxilium will receive 3.1359 QLT shares for each Auxilium share, subject to certain adjustments.

For QLT shareholders, the transaction represents a 25% premium based on a calculation of the closing NASDAQ stock prices of Auxilium and QLT on June 25, 2014, the last trading day prior to the announcement of the merger.

When completed, Auxilium shareholders will own about 76% of the combined entity on a fully diluted basis, and current QLT shareholders will own abou 24%, subject to certain adjustments.

Auxilium stated that the combined organization will be led by Auxilium's current leadership team and will maintain Auxilium's current offices in Chesterbrook, Pennsylvania. All current Auxilium directors are expected to join the merged company's board, joined by two current QLT directors.

Auxilium said it does not expect any material changes to its current U.S. operations or employment as a result of this transaction, and expects to grow its presence in both the U.S. and Canada. Shares of the combined company are expected to trade on NASDAQ and QLT is expected to be delisted from the Toronto Stock Exchange.

Deutsche Bank has delivered a commitment letter for a $225 million facility for the refinancing of the senior secured credit facility (together with cash on hand) that is subject to the execution of definitive agreements and other conditions.

The transaction is expected to close in the fourth quarter of 2014. Holders representing approximately 32% of QLT shares outstanding have agreed to vote in favor of the transaction.