PetVivo, Gel-Del Combine In Reverse Triangular Merger Agreement
Two biomedical device companies from Minnesota combined last week in a transaction known as a “reverse triangular merger.”
The arrangement involves the creation of a subsidiary by a parent company for the sole purpose of acquiring a company. Reverse triangular mergers are by definition more easily accomplished given the created subsidiary has only one shareholder, the acquiring company.
In this case, Eden Prairie-based PetVivo Holdings Inc. created a subsidiary plainly named Newco and is using it to purchase St. Paul-based Gel-Del Technologies Inc.
PetVivo, founded in 2013, licenses and commercializes medical devices in the veterinary space, although it claims to have products in the pipeline for human clinical applications. Last year it launched Kush, a biomaterial particle device that resembles cartilage and is used to treat osteoarthritis in dogs and horses.
Canine arthritis is believed to be a $2.3 billion market, PetVivo said in an SEC filing, as osteoarthritis afflicts an estimated 20 million dogs in the U.S. and Europe.
The idea and technology behind Kush came from Gel-Del, which specializes in the manufacture of thermoplastic biomaterials that resemble human tissue. PetVivo began licensing Gel-Del’s technology in 2014 and it was through those licensing negotiations that the two companies decided to merge.
Per their agreement, owners of Gel-Del common stock will receive 0.78 common shares of PetVivo, meaning an investor with 100 Gel-Del shares will hold 78 shares of PetVivo following the deal’s completion.
PetVivo said it expects the deal to close next month.