- Total consideration of approximately
$48 million over three years includes convertible preferred stock,
common stock and a note
- Transaction represents an excellent
strategic fit, complementary product expertise, economies of scale,
international reach and opportunities for margin expansion
PhotoMedex, Inc. (NasdaqGS and TASE:PHMD) announces it
has entered into a definitive agreement to sell its consumer
products and professional products businesses to DS Healthcare
Group (Nasdaq: DSKX), a Pompano, Florida-based developer of topical
pharmaceutical and personal care products, for total consideration
of approximately $48 million in a combination of convertible
preferred stock, common stock and a note.
This proposed transaction, which is structured in two reverse
triangular mergers, is subject to customary closing conditions,
including PhotoMedex and DS Healthcare Group shareholders approvals
and regulatory approvals. The boards of directors of both
PhotoMedex and DS Healthcare Group have voted unanimously in favor
of the transaction, which is expected to close in the second
quarter of 2016. Upon consummation of the transaction and assuming
conversion of convertible preferred securities and exercise of
existing warrants deemed by the parties to be equivalent in the
transaction to issued common stock, it is expected that there will
be approximately 43.3 million DS Healthcare Group common shares
outstanding. After conversion of the deemed PhotoMedex common stock
equivalents, PhotoMedex shareholders will own approximately 43% of
the company and DS Healthcare shareholders will own approximately
57%, each on an “as converted” basis.
Commenting on the proposed transaction, Dr. Dolev Rafaeli, chief
executive officer of PhotoMedex, said, “This agreement presents our
shareholders with an opportunity to receive significant value for
our operating assets, both immediately and over the coming three
years. In particular Radiancy’s home-use medical and personal care
devices franchise and its unique marketing platform will gain an
additional arsenal of complementary products for distribution
alongside our portfolio of consumer brands. Also, our Neova®
professional skin care line will move seamlessly into DS
Healthcare’s direct salesforce in Mexico, Spain and Colombia and
distributors in Canada, Portugal, Italy, South Africa, China, and
Brazil Our proprietary consumer marketing engine will be used to
increase the sales growth of DS Healthcare Group’s disruptive
products through DTC channels and a direct-marketing platform. The
structure of this agreement permits our shareholders to participate
in the growth anticipated by DS Healthcare in the near future while
the talented PhotoMedex staff is expected to transition to the new
owners. PhotoMedex intends to distribute the proceeds from this
agreement, net of certain professional fees, severance, income
taxes and other costs, to its shareholders in an orderly fashion
over the next three years.”
“We are very excited to add these innovative devices that have
absolutely no equivalent market competitor and a range of
proprietary technologies to our growing portfolio of products.
PhotoMedex has remarkable expertise in the development of personal
medical devices and has many additional products in the pipeline,
some of which have already received FDA clearance. In addition, the
Neova® professional skin care line adds valuable access to a global
network of physicians. Through this transaction we will expand our
professional aesthetic and therapeutic skin care portfolio in
anti-aging skin care and specialty skin care products used
post-hair transplantation, and add to our portfolio of at-home
products for hair removal, acne treatment and back pain relief,”
commented Daniel Khesin, chairman and founder of DS Healthcare
Group. “Through this transaction we will have a truly global
footprint and a massive marketing structure to unlock extraordinary
synergies and opportunities for our shareholders.”
“DS Healthcare is uniquely positioned to immediately take
advantage of Radiancy assets to extract substantial value for all
shareholders,” stated Renee Barch-Niles, chief executive officer of
DS Healthcare. “Our combined product development expertise,
distribution relationships and industry-leading management team
will allow us to scale this business to unlock tremendous
appreciation to the company’s combined value.”
Transaction Terms
Under the terms of the agreement, DS Healthcare will issue $20
million convertible Series A preferred stock and a note in the
amount of $4.5 million in consideration of the Radiancy consumer
products business. In addition, in consideration of the PhotoMedex
technology business, in which Neova is a part, DS Healthcare will
issue 8.75 million common shares, of which 6.0 million will be
considered “make whole” shares such that the total value of the 6.0
million shares of common stock must have a value of $20 million on
the third anniversary of the closing or additional shares will be
issued. More information will be contained in a Form 8-K to be
filed today and available at www.sec.gov and in a proxy statement
to be issued to PhotoMedex shareholders and filed at
www.sec.gov.
In addition, the composition of the DS Healthcare Group board of
directors will change, and will include three directors from
PhotoMedex, three directors from DS Healthcare and one independent
director. Dolev Rafaeli, chief executive officer of PhotoMedex,
Dennis McGrath, president and chief financial officer of
PhotoMedex, and a third independent director from PhotoMedex’s
current board of directors, will join the DS Healthcare Group’s
board of directors upon closing of the transaction. The additional
board members will include Michael Pope, managing director of Vert
Capital and president of BOXLIGHT Corporation, Daniel Khesin,
chairman of the board and founder of DS Healthcare, and Renee
Barch-Niles, chief executive officer of DS Healthcare. The parties
will mutually agree upon a seventh and independent director.
PhotoMedex intends to seek the customary six-month extension to
comply with the Nasdaq minimum bid price requirement, which is
accompanied by moving the listing of PhotoMedex common stock from
the Nasdaq Global Market to the Nasdaq Capital Market.
Canaccord Genuity Inc. served as financial advisor to PhotoMedex
on this transaction and Stevens and Lee served as legal counsel.
Maxim Group LLC served as financial advisor and CKR Law served as
legal counsel to DS Healthcare Group on this transaction.
Stockholder Approval
In connection with the transaction, each of DS Healthcare and
PhotoMedex will file with the SEC a proxy statement to be sent to
their respective stockholders seeking the approval from DS
Healthcare’s stockholders of the issuance of shares to PhotoMedex
in connection with the mergers and from PhotoMedex’s stockholders
of, among other things, the sale of substantially all of its assets
pursuant to the mergers. The consummation of the mergers are
subject to, among other things, the review of the proxy statements
by the SEC, the approvals by DS Healthcare stockholders and
PhotoMedex stockholders, and other customary closing
conditions.
The boards of directors of PhotoMedex and DS Healthcare have
approved the transaction. Holders of approximately 24% of the
common stock of DS Healthcare and approximately 17% of the common
stock of PhotoMedex have agreed to vote their shares in favor of
the merger, which is currently expected to close in the second
quarter of 2016.
About DS Healthcare Group
DS Healthcare Group, Inc. is a leader in the development of
biotechnology for topical therapies. It markets through online
channels, specialty retailers, distributors, pharmacies, and
salons. Its research has led to a highly innovative portfolio of
personal care products and additional innovations in pharmaceutical
projects. For more information on DS Healthcare Group, visit
www.dshealthgroup.com.
About PhotoMedex
PhotoMedex is a global skin health company providing aesthetic
solutions to dermatologists, professional aestheticians and
consumers. The company provides proprietary products and services
that address skin diseases and conditions including acne and photo
damage. Its long-held experience in the physician market provides
the platform to expand its skin health solutions to spa markets, as
well as traditional retail, online and direct to consumer outlets
for home-use products. PhotoMedex sells home-use devices under the
no!no! brand for various indications including hair removal, acne
treatment and skin rejuvenation. The company also offers a
professional product line for acne clearance, skin tightening,
psoriasis care and hair removal sold to physician clinics and
spas.
Forward Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on current
expectations of PhotoMedex and are subject to uncertainty and
changes in circumstances. These forward-looking statements include,
among others, statements regarding the expected benefits of a
potential combination of PhotoMedex and DS Healthcare, including
the expected effect of the Mergers on PhotoMedex’s and DS
Healthcare’s financial results and profile (e.g., earnings per
share and synergies); the anticipated benefits of geographic
diversity that would result from the Mergers and the expected
results of PhotoMedex’s and DS Healthcare’s product portfolios;
expectations about future business plans, prospective performance
and opportunities; required regulatory approvals and the expected
timing of the completion of the transaction. These forward-looking
statements may be identified by the use of words such as “expect,”
“anticipate,” “believe,” “estimate,” “potential,” “should”, “will”
or similar words intended to identify information that is not
historical in nature. The inclusion of such statements should not
be regarded as a representation that such plans, estimates or
expectations will be achieved. There is no assurance that the
potential transaction will be consummated, and there are a number
of risks and uncertainties that could cause actual results to
differ materially from the forward-looking statements made herein.
These risks and uncertainties include (a) the timing to consummate
a potential transaction between PhotoMedex and DS Healthcare; (b)
the ability and timing to obtain required regulatory approvals and
satisfy or waive other closing conditions; (c) the possibility that
the Mergers do not close when expected or at all; or that the
companies may be required to modify aspects of the Mergers to
achieve regulatory approval; (d) the ability of DS Healthcare to
promptly and effectively integrate the respective businesses of
Radiancy and Photomedex Technology; (e) the requirement to satisfy
closing conditions to the Mergers as set forth in the Merger
Agreements; (f) the outcome of any legal proceedings that may be
instituted in connection with the transaction; (g) the ability to
retain certain key employees of Radiancy or PhotoMedex Technology;
(h) that there may be a material adverse change affecting
PhotoMedex or DS Healthcare, or the respective businesses of
PhotoMedex or DS Healthcare may suffer as a result of uncertainty
surrounding the transaction; and (i) the risk factors disclosed in
PhotoMedex’s filings with the Securities and Exchange Commission
(the “SEC”), including its Annual Report on Form 10-K, which
PhotoMedex filed on March 16, 2015. Forward-looking statements
reflect PhotoMedex’s management’s analysis as of the date of this
release, even if subsequently made available PhotoMedex on its
website or otherwise. PhotoMedex does not undertake to revise these
statements, whether written or oral, that may be made from time to
time to reflect subsequent developments, except as required under
the federal securities laws. Readers are cautioned not to place
undue reliance on any of these forward-looking statements.
Additional Information
In connection with the proposed transactions, PhotoMedex will
file a proxy statement with the SEC. INVESTORS AND SECURITY HOLDERS
ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE,
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and
security holders may obtain a free copy of the proxy statement
(when available) and other documents filed by PhotoMedex at the
SEC’s website at www.sec.gov. The proxy statement and such other
documents may also be obtained for free from PhotoMedex by
directing such request to PhotoMedex at 100 Lakeside Drive, Suite
100, Horsham, Pennsylvania 19044, Attention: Corporate Secretary,
or by telephone at (215) 619-3600.
PhotoMedex and certain of its directors and executive officers
may be deemed to be participants in the solicitation of proxies
from its stockholders in connection with the proposed transactions.
Certain executive officers and directors of PhotoMedex have
interests in the transaction that may differ from the interests of
stockholders generally. Information about PHMD’s directors and
executive officers is available in PHMD’s definitive proxy
statement, dated September 25, 2015, for its 2015 annual meeting of
stockholders. These interests will be described in the proxy
statement when it becomes available.
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version on businesswire.com: http://www.businesswire.com/news/home/20160222005883/en/
LHAKim Sutton Golodetz,
212-838-3777Kgolodetz@lhai.comBruce Voss,
310-691-7100Bvoss@lhai.com@LHA_IR_PR
orPhotoMedex, Inc.Dennis McGrath, Chief Financial
Officer215-619-3287info@photomedex.com
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