Proposed Merger of Equals between Vivalis and Intercell

Proposed Merger of Equals between Vivalis and Intercell - Creation of a European Biotech Leader in Vaccines and Antibodies

  • Vivalis (“Vivalis”) and Intercell AG (“Intercell”) to merge and form Valneva SE (“Valneva”), headquartered in Lyon (France) and listed on the regulated markets of NYSE Euronext in Paris and the Vienna Stock Exchange
  • Intercell shareholders to receive 13 Vivalis new ordinary shares for 40 Intercell shares, implying a 31.7% premium for Intercell shareholders based on the average share prices over the last three months
  • Additionally, Intercell shareholders to receive 13 new preferred shares for 40 Intercell shares. Each preferred share to be converted into 0.4810 new Valneva ordinary shares in the event of successful approval of Intercell’s Pseudomonas vaccine
  • Implied ownership of Valneva immediately post-merger completion: 55% former Vivalis shareholders / 45% former Intercell shareholders
  • Merger unanimously approved by the Supervisory Boards of Vivalis and Intercell
  • Irrevocable undertakings to vote in favor of the merger received from holders of 68.5% of the voting rights in Vivalis, including Groupe Grimaud
  • Fully committed EUR 40 million rights issue to be launched shortly after merger completion, to further strengthen Valneva’s financial profile. The Fonds Stratégique d'Investissement (“FSI”) supports the merger and will participate in the rights issue
  • Merger of Equals structure with each company contributing equally to Valneva’s Supervisory Board, and Valneva’s Management Board being comprised of two Vivalis and two Intercell Management Board members

Nantes (France) and Vienna (Austria), December 16th, 2012 – The Management Boards of Vivalis (NYSE-Euronext: VLS) and Intercell (VSE: ICLL) announce that they have agreed the terms of a merger to create the newly-named Valneva, a leading European biotechnology company in vaccines and antibodies.
The merger will create an integrated company with greater scale and diversification, strengthened financial profile and complementary talent and capabilities:

  • Complementary business models operating across the value chain with innovative technology platforms, discovery and development capabilities, state-of-the-art manufacturing and commercialization expertise
  • Diversified revenue streams from a marketed vaccine against Japanese Encephalitis Virus and income from multiple commercial technology licenses
  • A broad portfolio of promising partnered product candidates including a pandemic Influenza vaccine in Phase III, a Pseudomonas vaccine in Phase II/III and a Tuberculosis vaccine in Phase II
  • A portfolio of validated and commercialized technology platforms including the EB66® cell line for human and veterinary product development which is becoming the industry standard, the VIVA|ScreenTM antibody discovery platform and the IC31® novel adjuvant
  • EUR 5-6 million of expected cost synergies, on an annual run-rate basis, achieved within two years following completion of the merger
  • Substantially improved financial profile with a combined cash balance of EUR 94 million as at 30 September 2012 (adjusted for the planned EUR 40 million rights issue and the repayment of Intercell’s outstanding convertible bond). This improved financial position will enhance the development of Valneva’s vaccine and antibody portfolio and will de-risk the path to profitability
  • A complementary and experienced management team led by Thomas Lingelbach as President and Chief Executive Officer, Franck Grimaud as President and Chief Business Officer, Majid Mehtali as Chief Scientific Officer and Reinhard Kandera as Chief Financial Officer

Franck Grimaud, CEO and Majid Mehtali, CSO, co-managers of Vivalis, commented: "The merger with Intercell is an important step towards Vivalis' strategic goal of building a profitable, product-based biopharmaceutical company and laying the foundations for rapid revenue and profit growth going forward. The merger will significantly complement our core capabilities, in particular towards product development, while also adding strength and breadth to our R&D portfolio. As a result of multiple revenue streams, Valneva will also enjoy enhanced financial strength to fund its future growth."

Thomas Lingelbach, CEO of Intercell, commented: "Our strategy is to build a sustainable biotech company with a well-balanced and diversified value proposition enabling us to develop innovative products with a strong focus on preventing and treating infectious diseases. The merger will help achieve this goal by combining Vivalis’ discovery and technology capabilities with Intercell’s development, manufacturing and commercialization expertise. The increased financial strength will provide us greater capabilities to progress our pipeline. We expect both sets of shareholders will substantially benefit from the strengthened capabilities of the combined company."
Terms of the Merger
Upon completion of the merger, Intercell shareholders will receive 13 new Vivalis ordinary shares and 13 new preferred shares for every 40 Intercell shares that they own.
The merger consideration represents a premium for Intercell shareholders of 38.5% on the basis of the last closing share prices and 31.7% on the basis of the average share prices over the last three months, as at 14 December 2012.
Upon completion of the merger, expected to occur in May 2013, and based on the current issued share capital of each company, Vivalis former shareholders will hold approximately 55.0% and Intercell former shareholders approximately 45.0% of the issued share capital of Valneva.
Each preferred share will convert into 0.4810 Valneva new ordinary shares upon the issuance of a marketing authorization for Intercell’s Pseudomonas vaccine in the United States of America or in Europe, which would result in the creation of approximately 8.6 million new ordinary Valneva shares. The preferred shares will not be listed but will be freely transferable.
The issuance of this potential market authorization will unlock the significant value of the Pseudomonas vaccine from which all Valneva shareholders will benefit. Through Intercell’s current Pseudomonas partnership, Valneva will be entitled to either receive royalties tied to sales performance and potential development milestones of EUR 120 million or, should it elect to co-develop the product, participate in a profit sharing scheme.
The merger is subject to certain customary conditions, including, inter alia, the approval by shareholders of both Vivalis and Intercell and the obtaining of relevant regulatory consents. The terms of the merger will be reviewed by merger auditors in France and Austria. Additionally, a French independent expert will review the terms and conditions of the preferred shares.
Vivalis has received irrevocable undertakings from Groupe Grimaud and other Vivalis shareholders to vote their aggregate 68.5% voting rights of the outstanding share capital of Vivalis in favor of the merger.
Intercell has received an irrevocable undertaking from its principal shareholder under which this shareholder has agreed to vote its approximately 15% voting rights of the outstanding share capital of Intercell in favor of the merger.
Simultaneously with the completion of the Merger, Vivalis will be converted into a European Company (SE) with a Management Board (Directoire) and a Supervisory Board (Conseil de Surveillance). It will also change its corporate name to Valneva SE and will transfer its headquarters to Lyon.
The Supervisory Board will be chaired by Fréderic Grimaud, currently Chairman of the Supervisory Board of Vivalis. The remainder of Valneva’s Supervisory Board will be comprised of two additional members proposed by the Supervisory Board of Vivalis, three members proposed by the Supervisory Board of Intercell, and one member to be proposed by the FSI (upon completion of the planned EUR 40 million rights issue).
Michel Greco, a member of both Intercell’s and Vivalis’ Supervisory Boards, has resigned from the Supervisory Board of Intercell. Upon closing of the merger, he will be a Supervisory Board member of Valneva.
Valneva shares will be listed on the regulated markets of NYSE Euronext in Paris and the Vienna Stock Exchange.
Intended Rights Issue: EUR 40 million already secured
Shortly following completion of the merger, Valneva intends to launch a EUR 40 million rights issue, where its shareholders will have the right to subscribe on a pro rata basis.
Vivalis and Intercell have received the following commitments with respect to the intended rights issue, and therefore already secured the EUR 40 million capital increase:

  • The FSI has undertaken to participate in the rights issue for 62.5% of the total size of the offering, up to EUR 25 million
  • Groupe Grimaud and Unigrains (one of Groupe Grimaud’s long-term shareholders) have irrevocably undertaken to subscribe in aggregate to the rights issue for EUR 5 million
  • Two banks have committed to underwrite EUR 10 million under market-standard terms and conditions

Société Générale Corporate and Investment Banking is advising Vivalis in connection with the merger. Goldman Sachs International is advising Intercell in connection with the merger.

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