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Goodmans Deals & Cases

This section contains brief summaries of selected significant cases and transactions.  You'll also find representative lists  - by year - of major transactions and cases where Goodmans' involvement is a matter of public record or where inclusion in the list has been authorized by our clients.

Graceway Pharmaceuticals’ Acquisition by Medicis Pharmaceutical for US$455 Million

2011

Areas Corporate Restructuring, Employment and Labour, Intellectual Property , Litigation, Tax

Summary

Goodmans represented Graceway Canada Company in connection with Medicis Pharmaceutical Corporation’s acquisition of Graceway Pharmaceuticals. On December 2, 2011, Medicis Pharmaceutical Corporation (“Medicis”) completed the acquisition of substantially all of the assets of Graceway Pharmaceuticals, LLC and its subsidiaries (“Graceway”), including certain of the assets of its solvent Canadian subsidiary, Graceway Canada Company (“Graceway Canada”), following approval by Graceway’s board of directors, clearance under the Hart-Scott-Rodino Act and final approvals by the U.S. bankruptcy court overseeing Graceway’s Chapter 11 proceedings and the Canadian court overseeing the receivership proceedings of Graceway Canada. 

Graceway filed for Chapter 11 bankruptcy protection on September 29, 2011, having already signed an agreement to sell its assets to Galderma S.A. for US$275 million in cash, which agreement would be sought to be approved as a stalking horse agreement. Graceway Canada also provided the debtor in possession funding for its parent, on a super priority basis with the approval of the U.S. Court.

Graceway Canada’s assets were included in the purchase agreement and a process was required to help convey its assets to the purchaser free and clear of liens. However, Graceway Canada was solvent and could not utilize the Companies’ Creditors Arrangement Act. On October 4, 2011, with the support of its parent, Graceway Canada took an innovative approach and applied to the Ontario Superior Court to appoint RSM Richter Inc. (“Richter”) as its Receiver, albeit with a limited mandate to only oversee a coordinated sale of the assets of Graceway Canada with the sale in the U.S. bankruptcy proceedings. The Receiver did not take possession of Graceway Canada and it was not involved in the operation of its business pending the sale. However, this course of action ensured that a Court-supervised process was established to protect Canadian stakeholders in circumstances where they might otherwise be at risk due to the insolvency of the US parent.

In accordance with the bidding procedures approved by both the U.S. and Canadian courts at a joint hearing on October 17, 2011, Graceway, with the assistance of its financial advisors, Lazard Frères & Co. LLC and Alvarez & Marsal North America, LLC, ran a stalking horse sale process which resulted in Medicis being declared the successful bidder upon the completion of the auction held on November 18, 2011. With an initial stalking horse bid of US$275 million and a final auction outcome of US$455 million, the combined cross-border process resulted in a 165% increase in the proceeds realized for the international business.

Under the terms of the transaction, Medicis paid to Graceway a purchase price of US$455 million for Graceway’s commercial pharmaceutical product portfolio, which includes prescription products in the dermatology, respiratory and women’s health specialties, and certain other assets. A portion of the purchase price was paid to Richter, who administered the distribution of the proceeds.