DARA BioSciences, Inc., a Raleigh, North Carolina-based specialty pharmaceutical company focused on oncology supportive care products, has signed a merger agreement with Midatech Pharma PLC, a specialty pharmaceutical company located in Oxford, UK.

Under the deal, DARA has entered into a proposed acquisition agreement with Midatech whereby each share of DARA will be converted into the right to receive (i) 0.272 ordinary shares of Midatech, subject to certain adjustments and (ii) one contingent value right (CVR). All Midatech ordinary shares will be delivered to the holders of DARA common stock in the form of American Depositary Receipts (ADRs). Based on the current price of Midatech, each DARA share will be converted into ADRs with a value equivalent to approximately $1.20 per DARA share. The ADRs will be listed on NASDAQ. Current DARA stockholders are expected to own approximately 16% of Midatech after the closing of the transaction. Each CVR will represent the right to additional contingent cash payments in the event that certain sales milestones with respect to DARA’s products Gelclair and Oravig are met. A maximum aggregate value of $5.7 million in cash may become due and payable to the CVR holders in 2017 and 2018 upon attainment of the defined sales thresholds in 2016 and 2017, respectively.

The acquisition is subject to customary closing conditions including, among other things, approval of the transaction by stockholders of DARA and the listing of Midatech’s ADRs on NASDAQ. The acquisition is expected to close in the third or fourth quarter of 2015.

Source:DARA BioSciences