On August 24, 2016 ProMetic Life Sciences Inc. (TSX: PLI) (OTCQX: PFSCF) ("ProMetic" or the "Corporation") reported that it has entered into a binding agreement (the "Agreement") for the acquisition of Telesta Therapeutics, Inc, ("Telesta") by way of a plan of arrangement under the Canada Business Corporations Act (the "Acquisition") (Press release, ProMetic Life Sciences, AUG 24, 2016, View Source [SID:1234514710]).

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Under the terms of the Agreement, ProMetic will acquire all of the share capital of Telesta at a share price of $0.14 payable in ProMetic common shares. The number of common shares to be issued by ProMetic will be based on the volume-weighted average closing price ("VWAP") of ProMetic’s common shares for the five (5) trading days prior to the closing date of the Acquisition. Completion of the Acquisition is subject to the approval of Telesta’s shareholders and a number of customary closing conditions for a transaction of this nature, which include court and regulatory approvals (including the approval of the Toronto Stock Exchange). The Acquisition is expected to close in early November, 2016. The Agreement also contains customary deal protection mechanisms, including no shop provisions and a mutual $2.5 million breakup fee payable by Telesta or ProMetic in specified circumstances.

Strategic and Financial Benefits of the Transaction:
Provides the opportunity for further integration of manufacturing capability and longer term capacity expansion in a 150,000 sq. ft. facility in Belleville, Ontario;

Provides approximately $34 million in cash to be deployed towards ProMetic’s drug development and clinical programs and value generating activities;

Does not materially affect ProMetic’s EBITDA and operating cash flows;

Provides up to $50 million in potential tax attributes; and

Provides ProMetic with a significant foothold in Ontario, consolidating its presence as a major player in the Canadian market.
Pierre Laurin, President and CEO of ProMetic stated: "This acquisition opportunity is strategic for ProMetic in many ways, with immediate, mid-term and long-term financial and operational benefits. It allows ProMetic to secure flexibility in its continued objectives of seeking vertical integration from raw material sourcing to distributing finished biopharmaceuticals in North America and abroad. The addition of a central Canada location also fits well with our strategy of facilitating the pursuit of Canadian national self-sufficiency for plasma-derived therapeutic products", added Mr. Laurin.
Commenting on the transaction, Dr. Mike Berendt, Chief Executive Officer of Telesta, said: "We are convinced that ProMetic Life Sciences represents a balanced, low-risk, high reward opportunity for Telesta’s shareholders. ProMetic’s business model combines recurrent and growing revenue from their world-class filtering technology, potential block buster upside from their small molecule fibrosis program, and multiple plasma therapeutic proteins targeting orphan diseases. The premium offered to Telesta’s shareholders by ProMetic is based on their ability to leverage multiple Telesta asset classes".
"The addition of the Belleville, Ontario facility whilst not essential to ProMetic’s current plans and timelines, provides the opportunity to build greater flexibility into our manufacturing capability. The newly refurbished portion of the Belleville, Ontario facility would require minor modifications to fit our purposes", declared Mr. Bruce Pritchard, Chief Operating Officer of ProMetic. "It allows us to consider a vertical integration of fill-finish operations, currently being outsourced, and the creation of further downstream processing lines, adding flexibility to the combination of plasma derived products manufactured simultaneously", added Mr. Pritchard.