U.K.-based SalvaRx Group plc is divesting its main operating subsidiary SalvaRx Ltd. to a Canadian biotechnology company called Portage Biotech Inc.
SalvaRx owns 94.2% of the unit and is selling its stake for $67.5 million, to be paid in 757,943,784 Portage shares. Of the total, 656,399,142 Portage shares will be given to existing SalvaRx shareholders on a pro rata basis, while another 40,692,698 will be given to SalvaRx option holders in exchange for their holdings.
The remaining 60,851,944 Portage shares will be held by SalvaRx Group. "Given the relatively disappointing performance of the company's share price on AIM, the directors have determined that the disposal and the demerger is the best way to unlock and maximise value for shareholders without causing dilution through raising additional funds at a price which they believe does not reflect the value of the company's underlying assets," the company said in a statement.
Portage has existing interests in four biotech companies and cash resources of approximately $7.3 million, which will be used to fund the ongoing development of the portfolio of oncology assets owned by SalvaRx Ltd.
Portage will retain Ian Walters, the CEO of SalvaRx and a board member of Portage, to support the development of the immuno-oncology assets.
Following the completion of the transaction, Ian Walters, Kam Shah, Richard Armstrong and Colin Weinberg will step down from the SalvaRx board. Shah, also the company's CFO, will be replaced by Denham Eke, who will also join the SalvaRx board.
Eke is the managing director of Burnbrae Group, a private international asset management company.