Lygos, Inc. cancelled the acquisition of Flexible Solutions International Inc. from Daniel OBrien and others in a reverse merger transaction.
September 29, 2022
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Lygos, Inc. entered into a non-binding Letter of Intent to acquire Flexible Solutions International Inc. (NYSEAM:FSI) from Daniel O'Brien and others in a reverse merger transaction on September 2, 2021. Lygos, Inc. entered into an Agreement and Plan of Merger and Reorganization to acquire Flexible Solutions International Inc. from Daniel O'Brien and others in a reverse merger transaction for $85.6 million on April 17, 2022. Subject to the terms and conditions of the merger agreement, each outstanding share of Lygos capital stock will be converted solely into the right to receive a number of common shares of FSI equal to the exchange ratio. The exchange ratio will equal the total number of FSI capital shares on a fully diluted basis outstanding as of the end of the last trading day of the FSI common shares on the NYSE American before the effective time of the merger multiplied by two and then divided by the total number of shares of Lygos capital stock on fully diluted basis outstanding as of the same time. Immediately following the effective time of the Merger, the former stockholders of Lygos are expected to own approximately 66.7% of the outstanding share capital of FSI. Lygos has entered into a financing arrangement with certain investors which has provided to Lygos $160 million in capital. The combined company intends to use these proceeds, in addition to FSI's cash balance at the closing of the Merger, to fund the development of the combined company's business. The proceeds from the loan will be used to purchase a portion of the FSI Common Shares from O'Brien, who beneficially owns approximately 36.6% of the outstanding FSI shares and to provide working capital to Lygos. Merged entity shall continue under the name Lygos, Inc. Upon the completion of the transactions contemplated by the Merger Agreement, the present management of FSI will resign and will be replaced by the management of Lygos. O'Brien will be employed as FSI's Head-Flexible Solutions Division. Upon closing, Eric Steen will serve as the Chief Executive Officer and a member of the Board of Directors for the combined company. Lygos' current Chief Financial Officer, Bryce Dille, and Chief Technology Officer, Nick Ohler, will retain these respective roles in the combined company.
The Closing is subject to satisfaction or waiver of certain conditions including, among other things, approval of the shareholders of FSI and stockholders Lygos; the listing of the FSI Common Shares to be issued in the Merger on the NYSE American; Registration Statements / Proxy Statement on Form S-4 shall have been declared effective by the SEC; The directors of FSI immediately prior to the Closing shall have resigned as directors of FSI, effective as of the Closing and other customary closing conditions. The merger agreement has been unanimously approved by the boards of directors of FSI and Lygos on April 10, 2022. Also in connection with the Merger Agreement, (i) the officers, directors and certain shareholders of FSI holding approximately 37% of the outstanding share capital of FSI have each entered into a support agreement in favor of Lygos. The transaction is expected to close in the third quarter of 2022.
BTIG, LLC acted as financial advisor and fairness opinion provider and William T. Hart of Hart & Trinen L.LC. acted as legal advisor to FSI. John Bautista, Albert Vanderlaan and Richard Vernon Smith of Orrick, Herrington & Sutcliffe LLP acted as legal advisors and legal due diligence providers to Lygos. Malek Remian LLC acted as fairness opinion provider to FSI.
Lygos, Inc. cancelled the acquisition of Flexible Solutions International Inc. (NYSEAM:FSI) from Daniel O'Brien and others in a reverse merger transaction on September 30, 2022.
Flexible Solutions International, Inc. is engaged in manufacturing and marketing biodegradable polymers which are used in the oil, gas and agricultural industries. The Company also develops, manufactures and markets specialty chemicals that slow the evaporation of water. Its products include HEATSAVR and WATERSAVR. Its segments include Energy and water conservation products (EWCP), and Biodegradable polymers (TPAs). Its EWCP segment consists of liquid swimming pool blankets which save energy and water by inhibiting evaporation from the pool surface, and a food-safe powdered form of the active ingredient within the liquid blankets and which are designed to be used in still or slow-moving drinking water sources. Its TPA segment is used by the petroleum, chemical, utility and mining industries to prevent corrosion and scaling in water piping. This product can also be used in detergents to increase biodegradability and in agriculture to increase crop yields by enhancing fertilizer uptake.