Zila enters into merger agreement with Tolmar

June 29, 2009
Upon the completion of the proposed merger, Zila will no longer be a publicly traded company.

Zila, Inc. has announced that it has entered into a definitive merger agreement with Tolmar Holding, Inc., a privately held, pharmaceutical research, development, manufacturing and commercial operations company. Under terms of the agreement, Tolmar will acquire all of the outstanding shares of Zila for a cash purchase price of $0.38 per share, representing an approximate premium of 18% over the closing price of Zila's shares on June 24, 2009. Total consideration paid by Tolmar includes the purchase of Zila's existing $12 million senior secured convertible debt at a discount.

The proposed merger transaction is subject to customary closing conditions, including approval by Zila's stockholders, but is not subject to any financing contingency.

David Bethune, Zila's chairman and CEO, stated, "We are fortunate to have entered into this merger agreement with Tolmar, given Zila's current financial condition and our inability to access the financial markets. The Board of Directors conducted a substantial and exhaustive review of Zila's available alternatives, before concluding that this transaction was fair to and in the best interest of the company and its stockholders. I am gratified that we have found a way to both satisfy our debt obligations and provide value for our shareholders. This merger will provide the resources and platform for Zila's dedicated employees to realize the true worldwide potential of Zila's oral cancer screening and periodontal products."

Zila's Board of Directors approved the merger agreement and resolved to recommend that Zila's stockholders vote in favor of completing the proposed merger with Tolmar. Zila intends to hold a special meeting of its stockholders as soon as practicable, and the parties anticipate that the proposed merger will close in late August. Upon the completion of the proposed merger, Zila will no longer be a publicly traded company.