Versicor Inc and Biosearch Italia SpA have signed a definitive agreement and plan of merger whereby Biosearch will merge with and into Versicor in a stock-for-stock exchange valued at $260.7 million. This merger is expected to create an international biopharmaceutical company to discover, develop, manufacture and commercialize novel antibiotic and antifungal agents for tough-to-treat infections.

With an experienced scientific and professional staff in California and Italy, as well as an Italian manufacturing subsidiary, the combined company will have a presence in North America and Europe, the two largest pharmaceutical markets. The combined company will have a pipeline of two Phase III product candidates (anidulafungin and ramoplanin), one Phase II product candidate (dalbavancin), one Phase I product candidate (BI-K0376) and numerous pre-clinical compounds in development. Following receipt of FDA and European regulatory approvals, the resulting company (which will temporarily keep the name Versicor) plans to directly commercialize anidulafungin and dalbavancin in North America and Europe.

The merger agreement, which has been unanimously approved by the boards of directors of both companies, provides that Biosearch shareholders will receive 1.77 shares of newly-issued Versicor common stock in exchange for each Biosearch ordinary share. Based upon Versicor's stock price at the close of business yesterday, the exchange ratio results in an implied purchase price of $21.43 per share of Biosearch. Versicor will seek approvals for shares of the combined company to trade on both Nasdaq and the Nuovo Mercato.

As a result of the proposed transaction, the combined company expects to have a total of 47.8 million shares outstanding upon the closing, composed of 26.3 million currently outstanding Versicor common stock and 21.5 million Versicor common stock to be issued to Biosearch shareholders. The transaction is subject to approval by Versicor and Biosearch shareholders and to regulatory clearance, among other customary conditions. The transaction is expected to close in the first quarter of 2003.