Offer by Eagle Pharmaceuticals, Inc.
Acacia Pharma Group plc
Mon, March 28, 2022, 8:00 AM·8 min read
PROPOSED TRANSACTION WITH EAGLE PHARMACEUTICALS, INC.
THIS ANNOUNCEMENT CONTAINS REGULATED INFORMATION AND INSIDE INFORMATION
Not for release, publication or distribution, in whole or in part, directly or indirectly in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction
For immediate release
28 March 2022, 08:00 a.m. (Brussels time)
RECOMMENDED SCHEME OF ARRANGEMENT
of
ACACIA PHARMA GROUP PLC
by
EAGLE PHARMACEUTICALS, INC.
to be effected by means of a Scheme of Arrangement
under Part 26 of the Companies Act 2006
Summary
This summary should be read in conjunction with, and is subject to, the full text of the following announcement (including its Appendices).
Key highlights
Acacia Pharma Group PLC (“Acacia”) met its formulary goals for both Barhemsys® and Byfavo® in FY2021 and continues to be encouraged that feedback for both products is indicative of significant future commercial potential.
However, Acacia’s standalone financial condition has been negatively impacted by physical access limitations caused by the global COVID-19 pandemic, and a significant latency of demand due to postponement of surgical procedures. Accordingly, Acacia expects it would require a minimum of approximately US$115m of additional cash to fund operations to break-even (based on projections assuming break-even by early FY2025).
As a result, the Acacia Board appointed Greenhill to undertake a comprehensive review of strategic alternatives available to maximise value for Acacia Shareholders. The review included consideration of options to raise additional capital, but found that the terms on which such capital was likely to be available would have led to significant dilution and potential destruction of value for Acacia Shareholders.
Following this comprehensive exploration and assessment of all strategic alternatives, the board of directors of Acacia and the board of directors of Eagle Pharmaceuticals, Inc. (“Eagle”) hereby announce that they have reached agreement on the terms of a transfer of the entire issued and to be issued share capital of Acacia to Eagle by way of a scheme of arrangement under Part 26 of the Companies Act 2006 (the “Proposed Transaction”).
Under the terms of the Proposed Transaction, each Scheme Shareholder will receive as consideration (the “Consideration”):
for each Scheme Share, €0.68 in cash and 0.0049 New Eagle Shares
The Proposed Transaction values Acacia’s existing issued and to be issued share capital at approximately €94.7 million on a fully diluted basis.
The cash portion of the Consideration represents approximately 75 per cent. of the total Consideration, and the New Eagle Shares that Acacia Shareholders would receive represent approximately 25 per cent. of the total Consideration, which represents approximately 3.8 per cent. of the enlarged Eagle share capital in issue immediately following completion of the Scheme. The total Consideration equates to €0.90 for each Scheme Share.
The Consideration provides Acacia Shareholders with both up-front cash and, through the New Eagle Shares to be acquired by Acacia Shareholders, equity participation in the value creation potential for the enlarged business through de-risked funding requirements, enlarged group synergies, and being part of a well-funded entity with shares trading on a liquid exchange.
Having considered all of the available alternatives as part of its strategic review, the Acacia Board believes that the Proposed Transaction represents the best option for Acacia Shareholders to maximise the value of their shares, and therefore unanimously recommends the Proposed Transaction.
Furthermore, the Acacia Board considers that there is a significant risk that if the Scheme is not approved by the necessary number of Acacia Shareholders, this could lead to a very material reduction in the value attributable to Acacia Shares and/or an insolvency procedure relating to the Acacia Group, which could in turn result in negligible (if any) value being attributable to Acacia Shares.
In making its recommendation, the board of Acacia has considered the financial position of Acacia given the significant operational challenges as a result of the limited physical access to institutions resulting from the global COVID-19 pandemic, as well as the significant latency of demand due to the postponement of non-essential surgical procedures, as a result of which the Acacia Group has experienced a significant reduction in its available liquidity as the net revenue in 2021 and so far in 2022 continues to lag behind expectations.
Recommendation, irrevocable undertakings and shareholder support for the Proposed Transaction
The Acacia Directors consider the Proposed Transaction to be the best available option for Acacia Shareholders. In making this assessment, the Acacia Directors have received financial advice from Greenhill who, in providing its financial advice, has taken into account the commercial assessments of the Acacia Directors. Accordingly, the Acacia Directors intend unanimously to recommend that Acacia Shareholders vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting, as the Acacia Directors have irrevocably undertaken to do in respect of the 217,543 Acacia Shares which they hold and which they control (or can procure the control of) the voting rights, representing approximately 0.22 per cent. of the issued share capital of Acacia on 25 March 2022, being the last business day before this announcement.