Restoration Robotics Inc., which sells a robotic hair transplant system, agreed to merge with privately held aesthetics technology company Venus Concept Ltd. in an all-stock transaction.
Investors in San Jose, Calif.-based Restoration Robotics and Toronto-based Venus Concept will own about 15% and 85% of the combined company, respectively, and Venus Concept will become a wholly owned subsidiary of Restoration Robotics in the reverse triangular merger.
Restoration Robotics expects to complete the merger in the third quarter of 2019, subject to closing conditions including approvals from the shareholders of both companies, according to a March 15 press release. Revenue for the merged company is expected to be between $130 million and $135 million in 2019.
Following the transaction, the combined company will raise $21 million through a sale of shares at 82.5 cents apiece. Ew Healthcare Partners LP will lead the financing, which will also include investments from HealthQuest Capital, Madryn Asset Management LP, Longitude Capital Management Co. LLC, Restoration Robotics board member Fred Moll and Aperture Venture Partners LLC.
After the capital raising closes, the combined company will also issue common shares to Moll and InterWest Partners LLC in exchange for a $5 million note they financed to Restoration Robotics at 82.5 cents apiece, adjusted for stock splits.
Restoration Robotics expects to implement a 1-for-15 reverse stock split upon the completion of the merger.
Venus Concept's CEO Domenic Serafino and CFO Domenic Penna will serve as the CEO and CFO of the combined company. The combined company will have a board of nine directors, seven of whom will be from the board of Venus Concept and two from Restoration Robotics' board, including Moll.
SVB Leerink LLC is the financial adviser to Restoration Robotics while Latham and Watkins LLP and Yigal Arnon & Co. are the company's legal advisers. Reed Smith LLP and Gornitzky & Co. are the legal advisers to Venus Concept.
Shares of Restoration Robotics surged in early trading and closed up 7.91% at 90 cents on March 15.