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Concordia International Corp. – ‘40FR12B’ on 6/1/15 – ‘EX-99.27’

On:  Monday, 6/1/15, at 5:09pm ET   ·   Accession #:  1193125-15-209295   ·   File #:  1-37413

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/01/15  Concordia International Corp.     40FR12B               36:10M                                    Donnelley … Solutions/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 40FR12B     Registration of Securities of a Canadian Issuer --  HTML     40K 
                          SEA'34 §12(b)                                          
 2: EX-99.1     Miscellaneous Exhibit                               HTML    404K 
11: EX-99.10    Miscellaneous Exhibit                               HTML     21K 
12: EX-99.11    Miscellaneous Exhibit                               HTML    110K 
13: EX-99.12    Miscellaneous Exhibit                               HTML    373K 
14: EX-99.13    Miscellaneous Exhibit                               HTML     43K 
15: EX-99.14    Miscellaneous Exhibit                               HTML    266K 
16: EX-99.15    Miscellaneous Exhibit                               HTML    137K 
17: EX-99.16    Miscellaneous Exhibit                               HTML    105K 
18: EX-99.17    Miscellaneous Exhibit                               HTML     52K 
19: EX-99.18    Miscellaneous Exhibit                               HTML    380K 
20: EX-99.19    Miscellaneous Exhibit                               HTML    217K 
 3: EX-99.2     Miscellaneous Exhibit                               HTML    225K 
21: EX-99.20    Miscellaneous Exhibit                               HTML     30K 
22: EX-99.21    Miscellaneous Exhibit                               HTML     19K 
23: EX-99.22    Miscellaneous Exhibit                               HTML     80K 
24: EX-99.23    Miscellaneous Exhibit                               HTML     31K 
25: EX-99.24    Miscellaneous Exhibit                               HTML     86K 
26: EX-99.25    Miscellaneous Exhibit                               HTML    848K 
27: EX-99.26    Miscellaneous Exhibit                               HTML    457K 
28: EX-99.27    Miscellaneous Exhibit                               HTML    215K 
29: EX-99.28    Miscellaneous Exhibit                               HTML    243K 
30: EX-99.29    Miscellaneous Exhibit                               HTML     27K 
 4: EX-99.3     Miscellaneous Exhibit                               HTML    470K 
31: EX-99.30    Miscellaneous Exhibit                               HTML     24K 
32: EX-99.31    Miscellaneous Exhibit                               HTML     25K 
33: EX-99.32    Miscellaneous Exhibit                               HTML     24K 
34: EX-99.33    Miscellaneous Exhibit                               HTML     17K 
35: EX-99.34    Miscellaneous Exhibit                               HTML     15K 
36: EX-99.35    Miscellaneous Exhibit                               HTML     13K 
 5: EX-99.4     Miscellaneous Exhibit                               HTML    533K 
 6: EX-99.5     Miscellaneous Exhibit                               HTML    251K 
 7: EX-99.6     Miscellaneous Exhibit                               HTML    376K 
 8: EX-99.7     Miscellaneous Exhibit                               HTML     25K 
 9: EX-99.8     Miscellaneous Exhibit                               HTML     20K 
10: EX-99.9     Miscellaneous Exhibit                               HTML     20K 

Exhibit 99.27

BUSINESS ACQUISITION REPORT

Form 51-102F4

Item 1 - Identity of the Company

Concordia Healthcare Corp. (the “Company”)

277 Lakeshore Road East

Suite 302

Oakville, Ontario

L6J 1H9

For further information in respect of this report and the significant acquisition described herein, please contact:

Leith J. Tessy

Chief Financial Officer and Secretary of the Company

(905) 842-5150

Item 2 - Details of Acquisition

On May 15, 2014, Concordia Pharmaceuticals Inc. (“CPI”), a wholly-owned subsidiary of the Company, completed the purchase of Donnatal®, pursuant to the terms and conditions of a previously announced asset purchase and sale agreement entered into on March 19, 2014 (the “Asset Purchase Agreement”), from a privately held specialty pharmaceutical company carrying on business as Revive Pharmaceuticals (“Revive Pharmaceuticals”).

Donnatal® is an adjunctive therapy in the treatment of irritable bowel syndrome (“IBS”) and acute enterocolitis and is available in two formulations: immediate release Donnatal® Tablets, and immediate release Donnatal® Elixir, a fast acting liquid. In addition to the drug, the Company acquired the sales and marketing infrastructure related to the product.

The effective date of the acquisition of Donnatal® was May 15, 2014 (the “Closing Date”). The date of acquisition for accounting purposes is the Closing Date.

The Company acquired Donnatal® for total consideration of USD$329,151,334, comprised of USD$200,000,000 in cash and an aggregate of 4,605,833 common shares of the Company valued at USD$129,151,334 based on the closing price of the Company’s stock on May 15, 2014 of CAD$30.50 per share converted to USD using the May 15, 2014 Bank of Canada closing USD:CAD exchange rate of 1:1.0877.

On the date of the Asset Purchase Agreement, the 4,605,833 common shares of the Company were valued at USD$65,342,697 based on the closing trading price of the Company’s common shares on the Toronto Stock Exchange on March 18, 2014 of CAD$15.80 per share converted to USD using the March 18, 2014 Bank of Canada closing USD:CAD exchange rate of 1:1.1137.

The Company paid for the cash component of the acquisition through a combination of available cash and debt financing. In this respect, the Company entered into a secured credit facility having a principal amount of up to USD$195,000,000, consisting of a USD$170,000,000 term loan and a USD$25,000,000 operating line (the “Credit Facility”) with GE Capital, Healthcare Financial Services and a syndicate of lenders. The Credit Facility is secured by the assets of the Company and the assets of its material subsidiaries.

The acquisition of Donnatal® complements the Company’s Legacy Drugs Division. The Company has no current plans or proposals for material changes in its business affairs or the affairs of Donnatal®, which may have a significant effect on the results of operations and financial position of the Company.

Not applicable.

The acquisition did not involve an informed person, associate or affiliate of the Company.

This report is dated June 9, 2014.

Item 3 - Financial Statements

The following financial statements have been included with this report:

- 2 -

SCHEDULE A

DONNATAL PRODUCT LINE

OF PBM PHARMACEUTICALS, INC.

Carve-Out Financial Statements

(in US Dollars)

For the Three Months Ended March 31, 2014 and 2013

and the Years Ended December 31, 2013 and 2012

		>  Certified Public
		Accountants & Consultants
		4401 Dominion Boulevard, 2nd Floor
		Glen Allen, VA 23060
		210 Ridge-Mclntire Road, Suite 500
		Charlottesville, VA 22903
		www.keitercpa.com

DONNATAL PRODUCT LINE OF PBM PHARMACEUTICALS, INC.

Table of Contents

REPORT OF INDEPENDENT ACCOUNTANTS

To the Directors of Concordia Healthcare Corp.:

Report on the Financial Statements

We have audited the accompanying carve-out balance sheets of the Donnatal Product Line of PBM Pharmaceuticals, Inc. (the “Company”), as defined in Note 1 to the carve-out financial statements as of December 31, 2013 and 2012, and the related carve-out statements of income, changes in net equity, and cash flows for the years then ended, and the related notes to the carve-out financial statements.

Management’s Responsibility for the Carve-Out Financial Statements

Management is responsible for the preparation and fair presentation of these carve-out financial statements in accordance with accounting principles generally accepted in the United States; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of carve-out financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these carve-out financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the carve-out financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the carve-out financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the carve-out financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the carve-out financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the carve-out financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the carve-out financial statements referred to above present fairly, in all material respects, the carve-out financial position of the Donnatal Product Line of PBM Pharmaceuticals, Inc. as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States.

		>  Certified Public
		Accountants & Consultants
June 6, 2014		4401 Dominion Boulevard, 2nd Floor
Glen Allen, Virginia		Glen Allen, VA 23060
		T:804.747.0000  F:804.747.3632
		www.keitercpa.com

REPORT OF INDEPENDENT ACCOUNTANTS

To the Directors of Concordia Healthcare Corp.:

We have reviewed the accompanying carve-out balance sheet of the Donnatal Product Line of PBM Pharmaceuticals Inc. (the “Company”), as defined in Note 1 to the carve-out financial statements as of March 31, 2014, and the related carve-out statements of income, changes in net equity, and cash flows for the three months ended March 31, 2014, and the related carve-out statements of income and cash flows for the three months ended March 31, 2013, and the related notes to the carve-out financial statements. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of Company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the carve-out financial statements as a whole. Accordingly, we do not express such an opinion.

Management is responsible for the preparation and fair presentation of the carve-out financial statements in accordance with accounting principles generally accepted in the United States and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the carve-out financial statements.

Our responsibility is to conduct the reviews in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance that there are no material modifications that should be made to the carve-out financial statements. We believe that the results of our procedures provide a reasonable basis for our report.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying carve-out financial statements in order for them to be in conformity with accounting principles generally accepted in the United States.

June 6, 2014

Glen Allen, Virginia

DONNATAL PRODUCT LINE OF PBM PHARMACEUTICALS, INC.

(in US Dollars)

Carve-Out Balance Sheets

See accompanying notes to carve-out financial statements.

3

DONNATAL PRODUCT LINE OF PBM PHARMACEUTICALS, INC.

(in US Dollars)

Carve-Out Statements of Income

See accompanying notes to carve-out financial statements.

4

DONNATAL PRODUCT LINE OF PBM PHARMACEUTICALS, INC.

(in US Dollars)

Carve-Out Statements of Changes in Net Equity

See accompanying notes to carve-out financial statements.

5

DONNATAL PRODUCT LINE OF PBM PHARMACEUTICALS, INC.

(in US Dollars)

Carve-Out Statements of Cash Flows

See accompanying notes to carve-out financial statements.

6

DONNATAL PRODUCT LINE OF PBM PHARMACEUTICALS, INC.

(in US Dollars)

Notes to Carve-Out Financial Statements

Nature of Operations: PBM Pharmaceuticals, Inc. (the “Company”) is incorporated in Delaware and was formed on February 7, 2001. The Company distributes several branded prescription products including Donnatal® (the “Drug), a mild antispasmodic medication used for relief of cramps and pain associated with various stomach, intestinal, and bowel disorders, including irritable bowel syndrome.

On May 15, 2014, a subsidiary of Concordia Healthcare Corp. (the “Acquiring Company”) purchased all rights and patents to the Drug from the Company for consideration of approximately $329 million.

Basis of Presentation: These carve-out financial statements have been prepared on a carve-out basis from the Company’s accounting records to represent the assets, liabilities, and operating activities of the Drug, purchased by the Acquiring Company, on a stand-alone basis as of March 31, 2014, December 31, 2013, and December 31, 2012, and three months ended March 31, 2014 and 2013, and for the years ended December 31, 2013, and 2012 in accordance with accounting principles generally accepted in the United States.

The carve-out financial statements are not necessarily indicative of the results that would have been attained if the Drug were owned by a separate legal entity during the periods presented and therefore are not necessarily indicative of future operating results. No adjustments have been made to reflect possible incremental changes to the cost structure as a result of the acquisition by the Acquiring Company. The basis for the allocation of assets, liabilities, and results of operations to the accounts of the carve-out financial statements are as follows:

Accounts receivable - net were allocated to the carve-out financial statements based on the net sales ratio of the Drug relative to the total net sales of the Company.

Inventories - net, intangible assets - net, sales - net, allowance for sales returns, and cost of sales were allocated to the carve-out financial statements based on the Company’s existing accounting records specific to the carved-out assets, liabilities, and operations.

Prepaid expenses, accounts payable, accrued expenses, net property and equipment, and selling, general, and administrative expenses were allocated to the carve-out financial statements based on a blended methodology, based first on the Company’s accounting records specific to the carved-out assets, liabilities, and operations, and if not specifically identifiable, they were allocated based on the net sales ratio of the Drug relative to the total net sales of the Company, as applicable.

7

DONNATAL PRODUCT LINE OF PBM PHARMACEUTICALS, INC.

(in US Dollars)

Notes to Carve-Out Financial Statements, Continued

Basis of Presentation, Continued: These carve-out financial statements are prepared on the historical cost basis. The accounting policies have been consistently applied to all the periods presented unless otherwise stated. The carve-out financial statements are presented in U.S. dollars. The functional currency is also the U.S. dollar as this is the principal currency of the economic environment in which the Company operates.

Use of Estimates: The preparation of carve-out financial statements in conformity with generally accepted accounting principles requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the carve-out financial statements and the reported amounts of revenues and expenses during the periods reported. Significant items subject to such estimates and assumptions include the carrying amount of trademarks and valuation of allowances for receivables, customer returns, and inventories. Actual results could differ from those estimates.

Revenue Recognition: Sales and related cost of sales (including shipping costs) are recognized when title and risk of loss pass to the customer, which is generally upon delivery, provided collectability is probable. Sales are shown net of the estimated sales returns and sales discounts. Discounts are reductions to invoiced amounts offered to customers for payment within a specified period and/or standard fees associated with the Company’s distribution agreements. Provisions for discounts and sales returns are estimates based on the Company’s experience and expectations.

Accounts Receivable, Net: Accounts receivables are reported net of an allowance for doubtful accounts. The allowance is based on management’s estimate of the amount of receivables that will actually be collected. The allowance was $26,656 at March 31, 2014. The allowance was $26,656 and $0 at December 31, 2013 and 2012, respectively.

Concentrations of Credit Risk and Significant Customers: Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable. The Company performs ongoing credit evaluations of its trade customers prior to delivery and generally does not require collateral. At March 31, 2014, three customers accounted for 88% of the Drug’s gross accounts receivable. For the three months ended March 31, 2014 and 2013, three customers accounted for 90% and 94%, respectively of the Drug’s gross sales. At December 31, 2013, three customers accounted for 98% of the Drug’s gross accounts receivable, and at December 31, 2012 three customers accounted for 93% of the Drug’s gross accounts receivable. For the years ended 2013 and 2012, three customers accounted for 94% and 93%, respectively, of the Drug’s gross sales.

8

DONNATAL PRODUCT LINE OF PBM PHARMACEUTICALS, INC.

(in US Dollars)

Notes to Carve-Out Financial Statements, Continued

Inventories, Net: Inventories consist of merchandise held for resale and are stated at the lower of cost determined on first-in, first-out (“FIFO”) method, or market. There is an inventory reserve for all damaged and expired merchandise, including merchandise with less than six months of shelf life remaining.

Property and Equipment: Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is calculated on the straight-line method over the estimated useful lives ranging from three to ten years. Costs of repairs and maintenance are expensed as incurred.

Intangible Assets: Intangible assets are amortized over their respective estimated useful lives to their estimated residual values in accordance with the provisions of Financial Accounting Standards Board (“FASB”) guidance on goodwill and other intangible assets, and are reviewed for impairment in accordance with FASB guidance on accounting for impairment or disposal of long-lived assets. No impairment losses were recognized in 2014, 2013 or 2012.

Income Taxes: The Company, with the consent of its stockholders, has elected for federal income tax purposes to be an S Corporation. In lieu of corporate income taxes, the stockholders of an S Corporation are taxed on their proportionate share of the Company’s taxable income or loss. Accordingly, no provision or liability for income taxes has been included in the accompanying carve-out financial statements.

Income Tax Uncertainties: The Company follows FASB guidance related to accounting for uncertainty in income taxes, which clarifies the accounting for income taxes by prescribing the minimum recognition threshold that a tax position is required to meet before being recognized in the Company’s carve-out financial statements. Management has evaluated the effect of guidance surrounding uncertain income tax positions and concluded that the Company has no significant carve-out financial statement exposure to uncertain income tax positions at March 31, 2014, and December 31, 2013, and December 31, 2012. The Company’s income tax returns for years from 2010 remain open for examination by tax authorities. The Company is not under audit by any tax jurisdiction.

Risks and Uncertainties: The pharmaceutical industry is highly regulated by federal laws and regulations. In addition, the introduction of generic drug competition could impair the value of the Company’s intangible assets or significantly affect sales volume.

Marketing and Advertising Expenses: The Company expenses marketing and advertising costs as they are incurred. Advertising and marketing expense related to the Drug were $328,302 for the three months ended March 31, 2014, and $534,765 for the three months ended March 31, 2013. Advertising and marketing expenses related to the Drug were $1,735,047 for 2013 and $407,918 for 2012.

9

DONNATAL PRODUCT LINE OF PBM PHARMACEUTICALS, INC.

(in US Dollars)

Notes to Carve-Out Financial Statements, Continued

Research and Development: Research and development costs are charged to operations as incurred. The costs related to the Drug were $79,452 for the three months ended March 31, 2014 and $51,023 for the three months ended March 31, 2013. The costs related to the Drug were $897,016 for 2013 and $127,588 for 2012.

Inventories consisted of the following components at:

Property and equipment consisted of the following at December 31:

10

DONNATAL PRODUCT LINE OF PBM PHARMACEUTICALS, INC.

(in US Dollars)

Notes to Carve-Out Financial Statements, Continued

Depreciation expense was $34,145 for the three months ended March 31, 2014 and $10,212 for the three months ended March 31, 2013. Depreciation expense was $92,201 and $32,592 for the years ended December 31, 2013 and 2012, respectively.

Intangible assets consist of the Drug’s brand trademarks and are amortized using the straight-line method over 15 years. Accumulated amortization at March 31, 2014 was $2,122,760. Accumulated amortization at December 31, 2013 and 2012 was $2,081,094 and $1,914,427, respectively. Amortization expense was $41,667 for the three months ended March 31, 2014 and 2013, respectively. Amortization expense was $167,667 for the years ended December 31, 2013 and 2012, respectively. Future amortization expense from March 31, 2014 is as follows:

In September 2012, due to a manufacturing problem at its supplier, the Company initiated a product recall for the Drug that had been manufactured by its supplier which were then in the supply chain. All recalled quantities of the Drug were subsequently returned to the Company and the Company returned the recalled Drug quantities to the supplier. Since September 2012, the Company has not been able to purchase this Drug from its supplier. The Company believes it has adequately addressed the manufacturing issue and has limited its exposure through the voluntary recall.

The Company is a party to a Master Logistics Agreement (the “Logistics Agreement”) with UPS Supply Chain Solutions, Inc. (“UPS”) through February 14, 2015. Under the Logistics Agreement, UPS provides warehouse services for the Drug, including receiving and unloading the Drug at the distribution facility, placing the Drug in storage, picking the Drug for shipment, and loading outbound trailers. UPS also provides customer service functions, including coordination of order acceptance, inquiry response, product returns management, and accounts receivable processing and oversight. Payments under this agreement were approximately $144,561 and $86,755 for the three months ended March 31, 2014 and 2013, respectively, and $347,021 and $284,050 for the years ended December 31, 2013 and 2012, respectively.

11

DONNATAL PRODUCT LINE OF PBM PHARMACEUTICALS, INC.

(in US Dollars)

Notes to Carve-Out Financial Statements, Continued

The Company has agreed to indemnify its distributors (and, in turn, is indemnified by its suppliers) of the Company’s products for events that may arise regarding product quality, defects, and conformity with federal laws and regulations. From time to time, the Company is involved in litigation related to the Drug that the Company considers to be in the normal course of business. The Company is not presently involved in any legal proceedings related to the Drug which management expects individually or in the aggregate to have a material adverse effect on its financial condition or results of operations.

The Company leases office space in Charlottesville, Virginia from a related party for its administrative headquarters and call center. Minimum future payments under its operating leases at March 31, 2014 are $211,006 for 2014 and $67,929 for 2015. Rent expense was $52,752 and $47,164 for the three months ended March 31, 2014 and 2013, respectively, and $188,654 and $68,348 for the years ended December 31, 2013 and 2012, respectively.

Employees are eligible to participate in an employee savings/retirement plan under Section 401(k) of the Internal Revenue Code. The plan provides for salary reduction contributions by eligible participants, subject to certain limitations, and matching contributions of 50% of the participant’s first 6% of elective deferrals. The Company contributed $343 and $434 to the plan for the three months ended March 31, 2014 and 2013, respectively, and $1,736 and $1,370 to the plan for the years ended December 31, 2013 and 2012, respectively.

The Company has evaluated subsequent events as they relate to the Drug for potential recognition or disclosure through June 6, 2014, the date the carve-out financial statements were available to be issued, and has determined there are no subsequent events to be reporting in the accompanying carve-out financial statements.

12

SCHEDULE B

Concordia Healthcare Corp.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2014

Concordia Healthcare Corp.

PRO FORMA CONSOLIDATED BALANCE SHEET

(Unaudited – prepared by management)

As at March 31, 2014

(Stated in thousands of U.S. Dollars)

Concordia Healthcare Corp.

PRO FORMA CONSOLIDATED INCOME STATEMENT

(Unaudited – prepared by management)

For the three months ended March 31, 2014

(Stated in thousands of U.S. Dollars)

Concordia Healthcare Corp.

PRO FORMA CONSOLIDATED INCOME STATEMENT

(Unaudited – prepared by management)

For the year ended December 31, 2013

(Stated in thousands of U.S. Dollars)

Concordia Healthcare Corp.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – prepared by management)

1. ACQUISITION OF DONNATAL®

Concordia Healthcare Corp. (“Concordia” or the “Company”) is a diverse healthcare company focused on legacy pharmaceutical products, orphan drugs, and medical devices for the diabetic population. The Company’s Legacy Drugs division consists of an ADHD-treatment drug, Kapvay® (clonidine extended release tablets), Ulesfia® (benzyl alcohol) Lotion, a Head Lice Treatment, and an Asthma-related medication, Orapred ODT® (prednisolone sodium phosphate orally disintegrating tablets). Concordia’s Specialty Healthcare Distribution (“SHD”) division distributes medical supplies targeting diabetes and related conditions. Concordia’s orphan drugs division, Pinnacle, markets Photofrin® in the United States.

On May 15, 2014, Concordia Pharmaceuticals Inc. (“CPI”), a wholly-owned subsidiary of the Company, completed the purchase of Donnatal®, pursuant to the terms and conditions of a definitive agreement announced previously and entered into on March 19, 2014, from a privately held specialty pharmaceutical company carrying on business as Revive Pharmaceuticals (“Revive Pharmaceuticals”). Donnatal® will be added to the Company’s Legacy Drugs division.

Donnatal®, an adjunctive therapy in the treatment of irritable bowel syndrome (“IBS”) and acute enterocolitis, is available in two formulations: immediate release Donnatal® Tablets, and immediate release Donnatal® Elixir, a fast acting liquid. For decades, Donnatal® has delivered gentle relief from the symptoms of IBS. In addition to the drug, the Company acquired the sales and marketing infrastructure related to the product.

The Company acquired Donnatal® for total consideration of US$329,151,334 comprised of US$200,000,000 in cash and an aggregate of 4,605,833 common shares of the Company valued at US$129,151,334 based on the closing price of the Company’s stock on May 15, 2014 of CAD$30.50 per share converted to USD using the May 15, 2014 Bank of Canada closing USD:CAD exchange rate of 1:1.0877.

The Company paid for the cash component of the acquisition through a combination of available cash and debt financing. In this respect, the Company entered into a secured credit facility having a principal amount of up to US$195 million, consisting of a US$170 million term loan and a US$25 million operating line (the “Credit Facility”) with GE Capital, Healthcare Financial Services and a syndicate of lenders. The Credit Facility is secured by the assets of the Company and the assets of its material subsidiaries.

2. BASIS OF PRESENTATION

The unaudited pro forma consolidated financial statements of Concordia have been prepared by management in accordance with International Financial Reporting Standards for inclusion in the Business Acquisition Report dated June 9, 2014. In the opinion of management, the pro forma consolidated financial statements include all adjustments necessary for fair presentation of the transactions as described above.

The unaudited pro forma consolidated financial statements of the Company have been compiled from the following financial information:

The conversion of Donnatal’s financial statement from US GAAP to IFRS has no material impact.

The unaudited pro forma consolidated balance sheet has been prepared as if the transactions described in Note 1 had occurred on March 31, 2014. The unaudited pro forma consolidated income statements have been prepared as if the transactions described in Note 1 had occurred on January 1, 2013.

The unaudited pro forma consolidated financial statements are not intended to reflect the financial position or performance of the Company which would have actually resulted had the proposed transactions described in Note 1 and other pro forma adjustments occurred as assumed. Further, these unaudited pro forma consolidated financial statements are not necessarily indicative of the financial position or performance that may be attained in the future. The unaudited pro forma consolidated financial statements should be read in conjunction with the financial information referred to above.

3. PRO FORMA CONSOLIDATED ADJUSTMENTS

The unaudited pro forma consolidated financial statements incorporate the following assumptions:

The above allocation of the purchase price is preliminary. The Company continues to assess and review the fair values of the net assets acquired. Since the Company continues to finalize the valuation of assets acquired and liabilities assumed at the date of the acquisition, the allocation of the purchase price could vary significantly from the amounts used in these unaudited pro forma consolidated financial statements.

As part of the above allocation of the purchase price, the net equity balance in the equity section of the Donnatal pro forma balance sheet as at March 31, 2014 of $3,331 has been eliminated.

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Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘40FR12B’ Filing		Date		Other Filings
Filed on:		6/1/15		F-X
		2/14/15
		12/31/14
		6/9/14
		6/6/14
		5/15/14
		3/31/14
		3/19/14
		3/18/14
		12/31/13
		3/31/13
		1/1/13
		12/31/12
		2/7/01
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