Concordia Healthcare Corp. has entered into a definitive agreement to acquire Donnatal, an adjunctive therapy in the treatment of irritable bowel syndrome ("IBS") and acute enterocolitis, from a privately held specialty pharmaceutical company carrying on business as Revive Pharmaceuticals ("Revive Pharmaceuticals").

"The acquisition of Donnatal represents an important advancement in the execution of Concordia's legacy product strategy, providing substantial and sustainable revenue going forward," said Mark Thompson, CEO of Concordia. "In addition, we believe that Donnatal will have a significant and positive impact on Concordia's net earnings and EBITDA."

Donnatal comes in two formulations: immediate release Donnatal Tablets, and immediate release Donnatal Elixir, a fast acting liquid. 

Management plans to pay for the cash component of the acquisition through a combination of available cash and debt financing. Accordingly, the company has entered into a commitment letter with GE Capital, Healthcare Financial Services and its affiliated entities ("GE"). Pursuant to the commitment letter, GE has agreed to provide a secured credit facility having a principal amount of up to U.S.$195 million, consisting of a $170 million term loan and a $25 million operating line (the "Credit Facility").The Credit Facility will be secured by the assets of the Company and the assets of its subsidiaries. The Credit Facility is subject to a number of customary conditions, including entering into definitive documentation.

The company has agreed to acquire Donnatal for U.S.$200 million in cash and an aggregate of 4,605,833 common shares of Concordia. The common shares issuable have an aggregate value of approximately U.S.$65.3 million based on the closing trading price of the company's common shares on the Toronto Stock Exchange on March 18, 2014, and represent approximately 16.19% of the company's outstanding common shares on a non-diluted basis (approximately 14.99% on a fully-diluted basis) after giving effect to the acquisition.

Revive Pharmaceuticals will also be entitled to have a representative nominated to the board of directors of the company provided that it maintains a certain shareholding level in the company. Completion of the acquisition is subject to customary closing conditions (including approval of the TSX), and acceptable financing. Management anticipates that the deal will close in the second quarter of 2014.