RSLS - ReShape Lifesciences® Enters Into Merger Agreement With Vyome Therapeutics and Asset Purchase Agreement With Biorad Medisys | Benzinga
ReShape and Vyome, a Clinical Stage Specialty Pharmaceutical Company Working To Treat Immuno-Inflammatory Diseases of Unmet Need, to Combine in All-Stock Merger
ReShape to Sell its Assets to Affiliate of Biorad Medisys for $5.16 Million
IRVINE, Calif. and CAMBRIDGE, Mass., July 09, 2024 (GLOBE NEWSWIRE) -- ReShape Lifesciences® (NASDAQ:RSLS), the premier physician-led weight loss and metabolic health-solutions company, and Vyome Therapeutics, Inc., a private clinical-stage company targeting immuno-inflammatory and rare diseases, today announced that they have entered into a definitive merger agreement under which ReShape and Vyome will combine in an all-stock transaction. The combined company will focus on advancing the development of its immuno-inflammatory assets and on identifying additional opportunities between the world-class Indian innovation corridor and the U.S. market.
Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of both companies, existing ReShape stockholders will own approximately 11.1% of the combined company immediately following the closing of the merger, subject to adjustment based on ReShape's actual net cash at closing compared to a target net cash amount of $5 million. At the closing of the merger, ReShape will be renamed Vyome Holdings, Inc. and expects to trade under the Nasdaq ticker symbol "HIND," representing the company's alignment with the U.S.-India relationship. The board of directors of the combined company will be comprised of six directors designated by Vyome and one director designated by ReShape and executive management of the combined company will consist of Vyome's executive officers.
Simultaneously with the execution of the merger agreement, ReShape entered into an asset purchase agreement with Biorad Medisys, Pvt. Ltd., which is party to a previously disclosed exclusive license agreement with ReShape for ReShape's Obalon® Gastric Balloon System. Pursuant to the asset purchase agreement, ReShape will sell substantially all of its assets to Biorad (or an affiliate thereof), including ReShape's Lap-Band® System, Obalon® Gastric Balloon System and the Diabetes Bloc-Stim Neuromodulation™ (DBSN™) System (but excluding cash), and Biorad will assume substantially all of ReShape's liabilities, for a purchase price of $5.16 million in cash, subject to adjustment based on ReShape's actual accounts receivable and accounts payable at the closing compared to such amounts as of March 31, 2024. The cash purchase price under the asset purchase agreement will count toward ReShape's net cash for purposes of determining the post-merger ownership allocation between ReShape and Vyome stockholders under the merger agreement.
Simultaneously with the execution of the merger agreement, ReShape, Vyome, and Vyome's wholly-owned subsidiary, Vyome Therapeutics Ltd., entered into agreements with certain existing accredited investors, pursuant to which the investors have committed to purchase a minimum of $7.3 million in securities of ReShape, Vyome and Vyome's subsidiary. Under these agreements, certain accredited investors have agreed to purchase up to $5.8 million in shares of common stock of the combined company immediately following completion of the merger which may be upsized through additional investments. The price per share for the common stock of the combined company to be paid by the investors in the offering will be calculated as a 30% discount to the agreed upon valuation of the combined company at the closing of the merger and does not contain any warrants or other convertible features. ReShape and the investors are executing and delivering the subscription agreements in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended, and contemporaneously with the sale of the shares of common stock will execute and deliver a registration rights agreement requiring the combined company to register the resale of the shares of common stock issued in the offering.
In order to facilitate the transactions contemplated by the merger agreement and asset purchase agreement, ReShape entered into an agreement with a majority of the holders of its outstanding series C preferred stock that will, subject to and contingent upon the completion of the merger and the asset sale, reduce the liquidation preference of the series C preferred stock from $26.2 million to the greater of (i) $1 million, (ii) 20% of the purchase price paid for the asset sale, and (iii) the excess of ReShape's actual net cash at the effective time of the merger over the minimum net cash required as a condition to the closing of the merger as set forth in the merger agreement. The series C preferred stock would automatically terminate at the effective time of the ...