Last updated on April 20, 2014 at 8:23 EDT

Medicago announces agreement to be acquired by Mitsubishi Tanabe Pharma in a transaction valued at $357M

July 12, 2013

QUÉBEC CITY, July 12, 2013 /PRNewswire/ – Medicago Inc. (TSX: MDG; OTCQX:
MDCGF), a biopharmaceutical company focused on developing highly
effective and competitive vaccines based on proprietary manufacturing
technologies and Virus-Like Particles (VLPs), announced today that it
has entered into a definitive arrangement agreement with Mitsubishi
Tanabe Pharma Corporation (“Mitsubishi Tanabe Pharma” or “MTPC”)
whereby MTPC will acquire all of the issued and outstanding common
shares (“Shares”) of Medicago, other than the Shares currently held by
Philip Morris Investments B.V. (“PMI”) an affiliate of Philip Morris
International Inc. and MTPC, for $1.16 in cash per Share (the “Purchase
Price”).  Upon completion of the transaction, Medicago will be jointly
owned by MTPC (60%) and PMI (40%).

The Purchase Price represents a premium of approximately 22.1% to the
closing price of $0.95 per Share on the TSX on July 11, 2013 and a
premium of approximately 46.8% and 61.1% over the 30-day and 90-day
volume weighted average prices of $0.79 and $0.72 per Share on the TSX,
respectively, up to and including July 11, 2013.  The transaction
represents a total enterprise value of approximately $357 million,
including the assumption of existing indebtedness, for 100% of

The transaction has been approved unanimously by the Board of Directors
of Medicago following the unanimous recommendation of a Special
Committee of Independent Directors. The Board of Directors of Medicago
also unanimously recommends that shareholders vote in favour of the
transaction at the special meeting of shareholders to be called to
approve the transaction. PMI, Medicago’s principal shareholder, which
currently holds 38.5% of all issued and outstanding Shares of Medicago,
has agreed to irrevocably support and vote its Shares in favour of the
transaction until April 12, 2014. In addition, all directors and
certain officers of Medicago holding approximately 1.6% of the issued
and outstanding Shares have also entered into agreements pursuant to
which they have agreed to vote their Shares in favour of the

“Mitsubishi Tanabe Pharma, a top 30 global pharmaceutical company, has
been a solid and committed partner with the ability to drive Medicago’s
future growth and success in the development of our best-in-class rapid
plant-based vaccines,” said Andy Sheldon, President and CEO of
Medicago. “Mitsubishi Tanabe Pharma’s capabilities in biopharmaceutical
research, development, and commercialization along with its financial
stability offer us the ideal opportunity to realize the full potential
of our platform. These resources provide us the ability to foster the
development of innovative vaccines with the financial stability to
expand our Quebec, Canadian, U.S. and global operations.”

“Building on our existing collaboration, we look forward to working with
the management and employees of Medicago to further develop the
business and advance their promising work,” said Michihiro Tsuchiya,
Representative Director of Mitsubishi Tanabe Pharma Corporation.  “We
are proud to invest in developing novel vaccines in Québec City and
North Carolina as part of our global operations.”

Fairness Opinions and Formal Valuation

TD Securities Inc. (“TD Securities”), as financial advisor to Medicago,
and Desjardins Capital Markets (“Desjardins”), as independent valuator
to the Special Committee, have each provided an opinion to the Special
Committee and Board of Directors of Medicago that, subject to the
assumptions, qualifications and limitations provided therein, the
consideration to be received by the shareholders (other than MTPC and
PMI) under the arrangement is fair, from a financial point of view, to
such shareholders. Desjardins has also provided the Special Committee
with a formal valuation completed under the supervision of the Special
Committee, as contemplated by Regulation 61-101 Protection of Minority Security Holders in Special Transactions (“Regulation 61-101″), and which concludes that, subject to the
assumptions, qualifications and limitations therein, the fair market
value of the Shares is between $1.05 and $1.35 per Share.

Transaction Details

The completion of the transaction is subject to court approval pursuant
to the Business Corporations Act (Québec) and the approval of Medicago’s shareholders. The transaction
is subject to Regulation 61-101 and the implementation of the
arrangement will be subject to the approval of 66 (2)/(3)% of the votes cast by shareholders present in person or by proxy at the
special meeting of shareholders of Medicago and by holders of more than
50% of the votes cast by Medicago’s minority shareholders being all
shareholders excluding MTPC, PMI and any of their respective
affiliates. The Company intends to mail a management information
circular in the upcoming weeks to its shareholders for a meeting
expected to be held before August 30, 2013. The transaction is also
subject to customary closing conditions, including receipt of all
regulatory approvals, and is expected to close later this calendar
year. The transaction is not subject to any financing condition.

The arrangement agreement provides for, among other things, a
non-solicitation covenant on the part of Medicago subject to customary
fiduciary out provisions. The arrangement agreement also provides MTPC
with a “right to match” and requires Medicago to pay a termination fee
in the amount of $9.25 million under certain circumstances.  MTPC has
agreed to pay Medicago a termination fee of $9.25 million if the
transaction is not completed as a result of a breach of representations
or covenants by MTPC. MTPC has also agreed to reimburse Medicago’s
expenses related to the transaction, up to an amount of $1,500,000, in
the event the transaction does not close as a result of certain
regulatory approvals not being obtained.

Upon closing of the transaction, holders of warrants and stock options
of Medicago will receive a cash payment equal to the difference between
$1.16 and the exercise price of such warrant or stock options.

MTPC has also agreed, subject to the necessary regulatory approvals
being secured, to make available to Medicago a non-interest bearing
loan in a principal amount not to exceed $13.5 million in three
instalments for the purpose of providing Medicago with adequate cash
liquidity until closing of the transaction should closing not have
occurred by September 15, 2013.  In the event the arrangement agreement
is terminated and the transaction does not close, the loan will become
due and payable, and Medicago will satisfy its obligations to repay the
loan through the issuance of Shares to MTPC at a price of $0.82 per

Further details regarding the terms of the transaction are set-out in an
Arrangement Agreement which will be available under the profile of
Medicago at www.sedar.com.


TD Securities is financial advisor to Medicago in connection with the
transaction and Desjardins Capital Markets acted as independent
valuator to the Special Committee of Medicago. McCarthy Tétrault LLP is
Medicago’s legal counsel. MTPC’s financial advisor is Goldman Sachs and
its legal counsel are Stikeman Elliott LLP and Ropes & Gray LLP.

About Medicago

Medicago is a clinical-stage biopharmaceutical company developing novel
vaccines and therapeutic proteins to address a broad range of
infectious diseases worldwide. The Company is committed to providing
highly effective and competitive vaccines and therapeutic proteins
based on its proprietary VLP and manufacturing technologies. Medicago
is a worldwide leader in the development of VLP vaccines using a
transient expression system which produces recombinant vaccine antigens
in plants. This technology has potential to offer more potent vaccines
with speed and cost advantages over competitive technologies, enabling
the development of a vaccine for testing in approximately one month
after the identification and reception of genetic sequences from a
pandemic strain. This production time frame has the potential to allow
vaccination of the population before the first wave of a pandemic, and
supply large volumes of vaccine antigens to the world market. Medicago
also intends to expand development into other areas such as biosimilars
and biodefense products where the benefits of our technologies can make
a significant difference. Additional information about Medicago is
available at www.medicago.com.

About Mitsubishi Tanabe Pharma

Mitsubishi Tanabe Pharma is a research-driven pharmaceutical company
based in Japan, specializing in research, development and marketing of
globally competitive pharmaceutical products focused on the field of
autoimmune disease, diabetes and kidney disease, and CNS disease. 
Mitsubishi Tanabe Pharma contributes to the healthier lives of people
around the world through the creation of pharmaceuticals that respond
to unmet medical needs.

Additional information about MTPC is available at http://www.mt-pharma.co.jp/e

Forward Looking Statements

This news release includes certain forward-looking statements or
forward-looking information for the purposes of applicable securities
laws and such statements and information are based upon current
expectations, which involve risks and uncertainties associated with
Medicago’s business and the environment in which the business operates.
Any statements contained herein that are not statements of historical
facts may be deemed to be forward-looking, including those identified
by the expressions “anticipate”, “believe”, “plan”, “estimate”,
“expect”, “intend”, and similar expressions to the extent they relate
to Medicago or its management. The forward-looking statements are not
historical facts, but reflect Medicago’s current expectations regarding
future results or events. These forward-looking statements are subject
to a number of risks and uncertainties that could cause actual results
or events to differ materially from current expectations, including the
matters discussed under “Risk Factors and Uncertainties” in Medicago’s
Annual Information Form filed on March 28, 2013, with the regulatory
authorities. Medicago assumes no obligation to update the
forward-looking statements, or to update the reasons why actual results
could differ from those reflected in the forward-looking statements.

SOURCE Medicago Inc.

Source: PR Newswire