14th Aug 2018 12:08
LONDON (Alliance News) - Shares in SalvaRx Group PLC soared on Tuesday after the company said it entered into a sale agreement for the disposal of its 94.2% stake in SalvaRx Ltd to Portage Biotech Inc.
Shares in SalvaRx were trading 76% higher at 78.56 pence each Tuesday midday, giving the company a market capitalisation of GBP28.6 million. Shares in the company had closed at 44.60p on Monday, which had valued the company at GBP16.3 million.
The biotechnology company said it will sell the holding for USD67.5 million, to be satisfied by the issue of 757.9 million shares in Portage.
The company said the consideration shares are valued at USD75.8 million, and represent a premium more than triple the market valuation of SalvaRx.
The company added that "no less" than 656.4 million Portage shares will also be transferred to shareholders on a pro-rata basis.
For every share in SalvaRx held on the demerger record date, shareholders will receive 18 Portage shares. This is roughly equivalent to USD1.80 per SalvaRx share.
After the disposal, SalvaRx will become, under AIM rules, a cash shell.
Following the disposal and the demerger, Chief Executive Officer Ian Walters, Chief Financial Officer Kam Shah, Non-Executive Directors Richard Armstrong and Colin Weinberg will resign from the company.
"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," said SalvaRx on Tuesday.
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