Covalent Group, Inc., a leader in the design and management of complex clinical trials and patient disease registries for the pharmaceutical, biotechnology and medical device industries, has entered into a definitive combination agreement with Remedium Oy, a privately-held, full-service clinical research organization (CRO) based in Finland with offices in 8 countries throughout Scandinavia, Central Europe, and Eastern Europe.
Transaction Details Under the terms of the agreement, which has been approved by the Boards of Directors of both companies and the shareholders of Remedium, Covalent expects to pay $20 million for all of the outstanding shares and common stock equivalents of Remedium. The consideration for the transaction is expected to be in the form of Covalent shares in the amount of $16 million and $4 million in cash, subject to certain purchase price adjustments. The closing is expected to occur at the end of the second quarter of 2006 subject to certain contingencies including, but not limited to, the approval of Covalent's shareholders and a scheduled new fundraising to help finance the transaction.
Upon closing, the combined company will be named Encorium BioSolutions Inc. (Encorium). Covalent will apply for a new ticker symbol in connection with the name change. Covalent expects that the combined company will continue to be listed on the Nasdaq Small Cap market subsequent to the closing.
Combined Operations Encorium BioSolutions, Inc. will be headquartered in Wayne, Pennsylvania and have its European base of operations in Espoo, Finland. At the time of closing, it will have approximately 220 employees based in North America, Scandinavia, and throughout Europe. Encorium will have a direct geographic reach that covers 26 countries with offices located in 10 countries including the United States and the United Kingdom as well as throughout Scandinavia, Central Europe, and Eastern Europe. In addition, Encorium will continue its collaboration with its Brazilian partner allowing the provision of full-service operational capabilities in 12 South and Central American countries.
Kenneth M. Borow, Covalent Group's President and Chief Executive Officer, commented, "We believe that this transaction represents a breakthrough event in Covalent's history. Previously, new business contracts of significant size and scope had been difficult to win when Covalent and Remedium were operating as stand-alone companies. The combined company will be able to compete for a broader range of global and regional new business contracts by virtue of its increased size, expanded geographic footprint, and depth of resources. In addition, this combination will provide Covalent with a global platform from which to further expand our highly respected position as a consulting company focused on value-added intellectual input, innovative drug development planning and design, and exceptional clinical trial execution."