Cardiovascular Systems Signs Merger Agreement

Cardiovascular Systems Inc. (CSI) announced that it has entered into a definitive merger agreement with Replidyne, Inc. in an all-stock transaction.

Under terms of the agreement, Replidyne will issue new shares of its common stock to CSI shareholders. Former CSI shareholders will own 83% of the combined company, and Replidyne shareholders will own 17% of the firm on a fully diluted basis using the treasury stock method, subject to adjustments as described in the merger agreement.

David L. Martin, President and Chief Executive Officer of CSI, said, “Executing this transaction with Replidyne is an expedient way to take our company into the public market and generate a capital infusion for future growth. With an estimated $35 million to $40 million in additional cash and investments from the merger, we can further expand our sales and marketing organization and infrastructure to drive revenue growth and continue to invest in product development for future market expansion.”

“After a diligent process of evaluating strategic alternatives carried out over several months, we believe that a merger with CSI presents our investors with a very good opportunity to realize future value,” stated Kenneth J. Collins, President and Chief Executive Officer of Replidyne. “Through our process we have evaluated a broad array of opportunities across the life sciences, molecular diagnostics and medical device industries.”

The boards of directors of both CSI and Replidyne have unanimously approved the transaction, subject to customary closing conditions, including approval by the shareholders of each of CSI and Replidyne. The merger agreement contains certain termination rights for both CSI and Replidyne. The directors, as well as certain significant shareholders of each of CSI and Replidyne, have approved the transaction.

The transaction is currently expected to close during the first quarter of 2009. Upon completion of the merger, Replidyne’s name will be changed to Cardiovascular Systems Inc. and the combined company will apply for listing on the NASDAQ Global Market under a new trading symbol.

CSI had filed for an initial public offering in January 2008 but withdrew its registration statement for the initial public offering. According to Martin, “The current equity market conditions have resulted in the IPO market coming to a standstill. Given the uncertainty regarding timing of a market recovery, we believe that this transaction offers the best opportunity at this time for continued growth and for our company to gain access to the public capital markets.”

SOURCE: Business Wire