SafeStitch Medical to merge with TransEnterix, raise $30M

August 14, 2013 by Brad Perriello

SafeStitch Medical says it's agreed to a merger with private equity-backed TransEnterix and plans to issue a $30 million private placement.

SafeStitch Medical to merge with TransEnterix, raise $30M

SafeStitch Medical (OTC:SFES) and TransEnterix are set to merge next quarter in a deal that includes a private placement worth about $30 million.

Miami-based SafeStitch said the deal will see it move to Research Triangle, N.C., but keep its name, stock symbol and place on the OTC exchange. TransEnterix CEO Todd Pope will helm the new SafeStitch, with chairman (and medtech veteran) Paul LaViolette at the head of the new firm's board. SafeStitch chairwoman Jane Hsiao will take a seat on the new entity's board, with OPKO Health chairman Phillip Frost joining the board, according to a press release.

The release did not mention SafeStitch founder, president & CEO Jeffrey Spragens or detail any other management changes. A SafeStitch representative was not available for comment this afternoon.

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The deal will see each share of TransEnterix stock converted into 1.1723 shares of the new SafeStitch, according to a regulatory filing. Shares held by non-accredited investors will be converted into cash, priced at the average SFES share price for the 60-trading day period before the merger closes. Shares were trading at 90¢ apiece as of about 2 p.m. today, down 2.2%.

The deal also calls for investors including Hsiao and Frost's Frost Gamma Investments Trust to acquire 7.5 million preferred shares at $4 each, or about $30 million, in a private placement, according to the filing. Each share would convert to 10 shares of common stock, according to the filing.