Under the terms of the definitive merger agreement between Nuvelo, Arca and Dawn Acquisition Sub, a wholly owned subsidiary of Nuvelo, Dawn Acquisition Sub will be merged with and into Arca and Arca will become a wholly owned subsidiary of Nuvelo.
Under the agreement, Nuvelo will issue new shares of its common stock to Arca common and preferred stockholders and assume outstanding options and warrants to acquire capital stock of Arca such that these stockholders, option holders and warrant holders are expected to own or have the right to acquire approximately 67% of the common stock of the combined company on a fully-diluted basis, using the treasury stock method.
Current Nuvelo stockholders are expected to own approximately 33% of the common stock of the combined company on a fully-diluted basis, using the treasury stock method.
The merger agreement contains certain termination rights for both Nuvelo and Arca, and further provides that, upon termination of the merger agreement under specified circumstances, Arca may be required to pay Nuvelo a termination fee of approximately $1.9 million and Nuvelo may be required to pay Arca a termination fee of approximately $0.9 million, both based on their relative enterprise values.
Subject to these and other customary closing conditions, the transaction is expected to close by the end of this year or early 2009.
Ted Love, chairman and CEO of Nuvelo, said: “After thorough review of numerous options, we chose to merge with Arca because it enables us to transform ourselves into a late-stage company with multiple significant milestones and a near-term commercialization opportunity, backed by a promising cardiovascular pipeline.”