(By Balaseshan) BioMimetic Therapeutics Inc. (NASDAQ: BMTI) shares jumped 74.22% in premarket after it has agreed with Wright Medical Group Inc. (NASDAQ: WMGI) for a business combination.
The transaction will combine BioMimetic's breakthrough biologics platform and pipeline with Wright's established sales force and product portfolio, to further accelerate growth opportunities in Wright's Extremities business.
Under the terms of the agreement, the transaction has a total potential value for BioMimetic shareholders of about $380 million, or $12.97 per share, based on Wright's closing stock price on November 16.
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Each share of BioMimetic common stock will be converted into the right to receive an upfront payment of $1.50 in cash and 0.2482 shares of Wright common stock. The upfront payment values BioMimetic at about $190 million, or $6.47 per share, based on Wright's closing stock price on November 16.
Each BioMimetic share will also receive one tradable Contingent Value Right (CVR), which entitles its holder to receive additional cash payments of up to $6.50 per share, which are payable upon receipt of FDA approval of Augment Bone Graft and upon achieving certain revenue milestones.
Although Wright cannot finalize the purchase price allocation and fair value assessment of the contingent consideration until the closing, and thus cannot yet assess the exact impact on its future GAAP earnings, Wright anticipates that the transaction will be dilutive to adjusted EBITDA until the second full-year post-FDA approval of Augment Bone Graft and accretive thereafter.
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Any contingent milestone payments will be paid in cash. The CVR payments to BioMimetic shareholders are structured as follows: $3.50 per share upon FDA approval of Augment Bone Graft; $1.50 per share upon the achievement of $40 million in trailing twelve month sales for all products contributed by BioMimetic; and $1.50 per share upon the achievement of $70 million in trailing twelve month sales for all products contributed by BioMimetic.
The latter two sales milestone payments cannot be made sooner than 24 and 36 months post-closing of the transaction, respectively. Wright will provide additional information on the financial impact of the transaction after the closing.
The transaction is expected to close in the first quarter of 2013. The transaction received the unanimous approval of the board of directors of both Wright and BioMimetic. In addition, several key shareholders of BioMimetic have evidenced their support of the transaction by entering into agreements to vote in favor of the transaction.
WMGI closed Friday's regular session up 1.27% at $20.01, while BMTI ended down 0.72% at $4.15.