Alchemia proposes merger with Meditech in all-share deal worth A$16.9 million

By E. Janene Geiss

Philadelphia, March 9 - Alchemia Ltd. and Meditech Research Ltd. announced late Wednesday a proposal to merge by way of an off-market takeover bid by Alchemia for Meditech in a deal worth A$16.9 million.

In a news release, Alchemia said it would offer Meditech shareholders one Alchemia share for every nine Meditech shares, valuing Meditech at A$16.9 million based on Alchemia's 30-day volume-weighted average price of A$1.207.

Based on Alchemia's 30-day volume-weighted average price, the offer represents a 38% premium to Meditech's closing share price of A$0.97 on March 8; and a 36% premium to Meditech's 30-day volume-weighted average price of A$0.98, officials said.

During the bid period, Alchemia said it would provide financial support for Meditech's ongoing operations in the form of a short-term secured loan of up to A$2 million. A bid implementation agreement was signed by the companies that provides for a payment of a break fee by either company, officials said.

The proposal has the unanimous support of the Meditech board, which intends to recommend the offer to Meditech shareholders in the absence of a superior proposal, officials said.

The combination of the companies would create a substantial drug development company with an extensive pipeline of products, a strong financial position and an experienced management team, the news release said.

"The Alchemia board believes Meditech will be an excellent addition to Alchemia's growing drug development and discovery portfolio," Tracie Ramsdale, Alchemia chief executive officer, said in the release.

Meditech has a product in phase 2 clinical trials in metastatic colorectal cancer patients and two anticancer products that have satisfactorily completed phase 1 trials, which complement Alchemia's early and late-stage revenue generating opportunities, officials said.

After the merger is complete, a Meditech director will join the Alchemia board as a non-executive director. Meditech's chief executive officer and chief scientific officer will be offered senior positions in the merged company, officials said.

The merged company will retain both its Brisbane and Melbourne, Australia, operations, officials said.

ABN Amro Morgans in the financial adviser and Allens Arthur Robinson is the legal adviser to Alchemia.

Global Markets Capital Group LLC is the financial adviser and Blake Dawson Waldron is the legal adviser to Meditech.

Alchemia is a Brisbane, Australia, drug-discovery company with a novel carbohydrate platform technology focused on development of generic, injectable anti-thrombotic Synthetic Heparin and development of treatments for oncology, eye diseases, antibiotics and pain.

Based in Melbourne, Australia, Meditech is a developmental stage biotechnology company focused on developing and commercializing drugs that improve health and quality of life of patients with cancer and other chronic diseases. The company has expertise in carbohydrate-based therapies, particularly products based upon the glycosaminoglycan, hyaluronic acid.

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