Dacha signs definitive acquisition agreement with Merus Labs International Inc.
TORONTO, July 4, 2014 /CNW/ - Dacha Strategic Metals Inc. (TSX-V: DSM) (“Dacha”) announced today that
it has entered into a definitive acquisition agreement with Merus Labs
International Inc. (“Merus”) (TSX: MSL, NASDAQ: MSLI) pursuant to which
Dacha will complete the balance of its previously announced investment
of at least $11 million in Merus.
As contemplated by the letter agreement between Dacha and Merus that
Dacha announced on June 10, 2014, the acquisition agreement provides
that Merus will acquire from Dacha, in exchange for common shares of
Merus (“Merus Shares”), a new subsidiary to be incorporated by Dacha
(“Newco”) and to which Dacha will contribute a minimum of $6 million
cash by way of equity subscriptions. The number of Merus Shares that
Dacha will receive in exchange for Newco will equal Newco’s cash on
hand at closing divided by $1.70.
On June 12, 2014, Dacha announced that it had subscribed for $5 million
of Merus Shares at a price of $1.70 per share as part of the bought
deal financing that Merus completed on June 19, 2014. Therefore, upon
completion of the transactions contemplated by the acquisition
agreement, it is expected that Dacha will have acquired a total of at
least approximately $11 million of Merus Shares at a price of $1.70 per
share, and the Merus Shares will represent substantially all of Dacha’s
assets. Subject to receiving all necessary regulatory and shareholder
approvals, Dacha intends to distribute the Merus Shares to its
shareholders as soon as reasonably possible following completion of its
sale of Newco to Merus with a view to ultimately winding up its
operations. This would involve, among other things, delisting Dacha’s
shares from the TSX Venture Exchange and Dacha ceasing to be a
The acquisition agreement has been unanimously approved by the Dacha
board of directors. Completion of the transaction is conditional upon
the conditions to closing set forth in the acquisition agreement, which
include receipt of all necessary stock exchange approvals, receipt of
Dacha shareholder approval and no material adverse change with respect
to Merus Labs or Dacha. If the transaction has not been completed by
August 31, 2014, either party may terminate the acquisition agreement.
Dacha will be seeking shareholder approval for the sale of Newco to
Merus, and for those actions required to facilitate the distribution of
the Merus Shares to its shareholders, at Dacha’s annual and special
meeting of shareholders in August 11, 2014. Certain Dacha shareholders,
who hold approximately 29.9% of the outstanding Dacha common shares,
have signed voting support agreements with Merus pursuant to which they
have agreed that they will vote their Dacha common shares in favour of
the sale of Newco at the meeting. Further details regarding the
proposed sale of Newco to Merus and the distribution of Merus Shares to
Dacha shareholders will be set out in Dacha’s management information
circular that will be mailed to shareholders in advance of the meeting.
This release contains certain “forward looking statements” and certain
“forward-looking information” as defined under applicable Canadian
securities laws. Forward-looking statements and information can
generally be identified by the use of forward-looking terminology such
as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”,
“believe”, “continue”, “plans” or similar terminology. Forward-looking
statements and information include, but are not limited to, statements
with respect to the transactions contemplated under the acquisition
agreement, receipt of the requisite regulatory and shareholder
approvals in respect thereof and Dacha’s intention to distribute the
Merus Shares to its shareholders and wind up its operations thereafter.
Forward-looking statements and information are subject to various known
and unknown risks and uncertainties, many of which are beyond the
ability of Dacha to control or predict, that may cause Dacha’s actual
results, performance or achievements may be materially different from
those expressed or implied thereby, and are developed based on
assumptions about such risks, uncertainties and other factors set out
here in, including but not limited to: the risk that the transaction
will not be approved by the TSX, the TSXV or Nasdaq or the Dacha
shareholders; risks and uncertainties related to the transaction not
being completed in the event that the other conditions precedent
thereto are not satisfied and other related risks and uncertainties.
Dacha undertakes no obligation to update forward-looking information
except as required by applicable law. Such forward-looking information
represents management’s best judgment based on information currently
available. No forward-looking statement can be guaranteed and actual
future results may vary materially. Accordingly, readers are advised
not to place undue reliance on forward-looking statements or
Completion of the sale of Newco to Merus Labs is subject to a number of
conditions, including TSXV acceptance and shareholder approval. 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 Management
Information Circular 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 the securities of Dacha should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the
proposed transaction and has neither approved nor disapproved the
contents of this press release.
SOURCE Dacha Strategic Metals Inc.