Skyline Medical Inc. agreed to merge with privately held CytoBioscience Inc., a Texas-based healthcare manufacturer and contract research organization.

Under the agreed terms, Skyline will pay the owners of CytoBioscience 19.8% of its common shares outstanding at the time of closing of the deal. This amounts to 1,234,086 shares valued at $1.9 million.

Skyline will also give the owners shares of class C, D and E nonconvertible, nonvoting preferred stock with a total liquidation preference of $22.7 million.

As part of the merger, CytoBioscience CEO James Garvin will become president of Skyline and join its board along with one other CytoBioscience designee. Carl Schwartz will remain CEO and a director of Skyline.

The merger has been approved by the boards of both companies and is expected to close by late September, subject to customary conditions.

Dawson James Securities Inc. served as financial adviser and Maslon LLP served as legal adviser to Skyline. Maynard Cooper Gale served as legal adviser to CytoBioscience.