Salix Pharma To Merge With Cosmo Tech - Update

(RTTNews) - Salix Pharmaceuticals Ltd (SLXP) Tuesday agreed to merge with Cosmo Technologies, a part of Italy-based Cosmo Pharmaceuticals S.p.A.; in a move that is expected to enhance its position in developing gastrointestinal products in the U.S., and create a corporate structure that enhances its acquisition strategy and organic growth.

The deal, which is to close in the fourth quarter of 2014, is expected to be modestly accretive to Salix's earnings per share in two years from now.

Salix, based in Raleigh, North Carolina, will become a unit of Irish domiciled Cosmo Tech, which will change its name to Salix Pharmaceuticals plc and is expected to list its shares on the NASDAQ Global Select Market.

Upon closure, shareholders of Salix are expected to own slightly less than 80 percent of the shares of Salix Pharmaceuticals plc and Cosmo is expected to own slightly more than 20 percent. The deal will be taxable to Salix shareholders.

Shareholders of Salix will receive one ordinary share of Salix Pharmaceuticals plc in exchange for each share of Salix Pharmaceuticals Ltd stock they own at closing.

Also, Cosmo will have the right to designate one director to serve on the board of Salix Pharmaceuticals plc and will be subject to certain standstill provisions for at least 10 years following the completion of the merger.

Salix Pharmaceuticals plc will own Cosmo's U.S. patents for rifamycin MMX, methylene blue MMX and Uceris, and will have specified rights of negotiation with respect to all products Cosmo or its affiliates seek to develop or commercialize in the U.S.

Also, 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.

Salix will receive certain rights and protections which will give it a right of first negotiation with respect to all future products Cosmo or its affiliates seek to market in the U.S. in the gastrointestinal space; and prohibit Cosmo from competing directly with the combined company.

The current executive team of Salix will continue to serve in their respective capacities within Salix Pharmaceuticals plc.

SLXP closed Tuesday at $137.27, down $0.07 or 0.05%, on a volume of over 1 million shares on the Nasdaq.