The Law Office of Lynnette Ariathurai A Professional Corporation

Tranzyme starts business merger with California company

The pharmaceutical and medical industries can be quite lucrative for many. However, it can also be quite competitive as well, which can cause challenges for many firms. One pharmaceutical company Tranzyme Pharma has experienced this type of challenge, prompting it to start a business merger with a privately-held California company.

Tranzyme decided to sell a majority of its stock to investors of the California company Ocera. This constituted $20 million worth of stocks sold during this merger transaction. However, Tranzyme shareholders will still retain 27.4 percent of stock in Tranzyme, while shareholders from Ocera will possess the remaining stocks. Part of the reason Tranzyme is making the merger is to satisfy a requirement to continue to be listed on the Nasdaq.

Tranzyme began to face problems after receiving test results for the company's experimental drugs. The results were disappointing and also left the company with no products being sold on the market. Tranzyme officials stated that they believe the merger will enable the two companies to combine the skills and knowledge possessed by both management teams in order to create profitable business endeavors.

The business merger in California is just one example of how this type of move can benefit a business. However, it is important that the legal documentation for finalizing a merger be carefully worded, which will help to avoid any type of confusion which may arise. This will make sure both parties actually obtain what they had agreed upon, which can also help to avoid potential future lawsuits caused by any vagueness in the legal documents.

Source: News Observer, "Tranzyme moving headquarters to California as part of merger," David Bracken, April 24, 2013

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