Nuvo Pharmaceuticals Inc. (TSX:NRI) signed a letter of intent to acquire Aralez Pharmaceuticals Canada Inc. from Aralez Pharmaceuticals Inc. (TSX:ARZ) for $62.5 million on August 9, 2018. Nuvo Pharmaceuticals entered into a share purchase agreement to acquire Aralez Pharmaceuticals Canada Inc. from Aralez Pharmaceuticals Inc. on September 18, 2018. In a related transaction, Nuvo Pharmaceuticals (Ireland) Limited entered into signed a letter of intent to acquire VIMOVO® and TREXIMET® royalties and related intellectual property of Aralez Pharmaceuticals Trading DAC for $47.5 million on August 9, 2018, Also, Aralez Ireland signed a letter of intent with Toprol Acquisition LLC for the sale of the Aralez Pharmaceuticals's TOPROL-XL® franchise to Deerfield Management Company, L.P. for approximately $130 million as a credit bid on August 10, 2018. Aralez has agreed to negotiate exclusively with Nuvo, with respect to the assets subject to the proposed transaction with Nuvo, until August 19, 2018.

As part of the financing, Deerfield Management Company, L.P. has delivered a financing letter, which contemplates that Deerfield would provide Nuvo with a 6-year term, 3.5% p.a. interest, and senior secured debt facility in the amount of $112.5 million. As part of the financing, Nuvo would issue to Deerfield 43.6 million common share purchase warrants. The definitive agreement in respect of the transaction would serve as the stalking horse bid in such a sale process and would entitle Nuvo to a customary termination fee if it were not ultimately the successful bidder in the process. In case of termination of agreement, Nuvo is entitled to receive a termination fee in the amount of $2.19 million.

The transaction is subject to entry into mutually agreeable definitive agreement, obtaining committed financing, applicable regulatory approvals and the satisfaction or waiver of other customary closing conditions. The proposed transactions are not conditioned on one another and will be subject to approval by the applicable Canadian and U.S. Bankruptcy Court, court approvals, execution of ancillary agreement and obtaining debt financing. As on August 20, 2018, Nuvo Pharmaceuticals has extended the period of exclusive negotiations with Aralez Pharmaceuticals Inc. and Deerfield Management Company, L.P. Negotiations for the proposed transaction and related financing are ongoing, with a view to executing definitive agreements as soon as practicable if the parties are able to agree on terms. The transaction is expected to close on December 31, 2018. The transaction is expected to be immediately and significantly accretive to revenue and adjusted EBITDA of Nuvo Pharmaceuticals.

Moelis & Company LLC and Alvarez & Marsal, LLC acted as financial advisors to Aralez Pharmaceuticals Inc. Jonah Mann, Jonah Mann, Courtney Wilson, Gary Volman, Christian Vieira, Ashley Taylor, Kathryn Esaw, Jean Guillaume Shooner, Lindsay Gwyer, Erin Fanjoy and Ryan Sheahan of Stikeman Elliot acted as legal advisors to Aralez Pharmaceuticals Canada Inc.Jonah Mann, Courtney Wilson, Gary Volman, Christian Vieira, Ashley Taylor, Kathryn Esaw, Jean Guillaume Shooner, Lindsay Gwyer, Erin Fanjoy and Ryan Sheahan of Stikeman Elliot acted as legal advisors and Adam M. Turteltaub, Paul Shalhoub and Sean Ewen of Willkie Farr & Gallagher LLP acted as the legal advisors to Aralez Pharmaceuticals. Robert Vaux and Chris Sunstrum of Goodmans LLP and Berkow Joseph, Cho Jonathan, Criddle Prue, Frogel Judah, Guyder Daniel, Livneh Keren, Shube Eric, Taylor Benjamin and Thomas Loren Allen & Overy LLP acted as the legal advisor to Nuvo Pharmaceuticals.