Tekmira to acquire a Delaware private company of equal value in a Delaware merger which avoids the inversion rules

OnCore, a private Delaware biopharmaceutical company with a controlling Bermuda shareholder, will be merged into a Delaware subsidiary of Tekmira Pharmaceuticals, a NASDAQ and TSX-listed BC biopharmaceutical company, with OnCore shareholders receiving Tekmira common shares on the merger. Immediately after the merger the OnCore shareholders may hold 51.7% of the Tekmira common shares – or 50% on a fully diluted basis.

As OnCore shareholders are expected to receive less than 60% of the votes and value of Tekmira common shares on the merger, the Code s. 7874 inversion rules are not expected to apply.  However, the Code s. 382 ownership change rules may restrict the use of OnCore’s NOLs.  (Although the s. 382 test is a 50% share ownership test which typically does not take options and convertibles into account, it applies having regard to ownership changes during a three year look-back period rather than only at a point in time.)

Neal Armstrong and Abe Leitner. Summary of Tekmira Pharmaceuticals Proxy Statement under Mergers & Acquisitions – Cross-Border Acquisitions - Outbound – Delaware Mergers.