Biotechs Progen and Avexa to merge

Progen Pharmaceuticals and Avexa have signed an exclusive and binding merger implementation agreement which, when completed, will create one  the the largest biotechnology companies in Australia, and valuing the  former at some A$82.0 million ($55.3 million).

Progen will propose to shareholders an A$20.0 million share buyback  option, to be completed prior to the merger. The combined entity will  have over A$60.0 million cash at transaction closing (assuming Progen's  proposed A$20.0 million share buyback is fully subscribed).  Shareholders from both firms will vote on the planned merger, which has  been unanimously agreed by the two boards of directors, in the first  quarter of 2009.

Under the terms of the accord, Progen will issue Avexa shareholders one  of its shares for every 12.857 they own, an effective 49.6% premium on  the former's previous closing price of A$0.90. On completion, Progen  shareholders will own 56% of the new entity and Avexa's 44%. The merged  company will be named Avexa Pharmaceuticals with headquarters in  Melbourne and offices in both Brisbane, Australia, and the San  Francisco Bay area in the USA.