Patheon takeover stymied by regulators
pharmafile | April 28, 2009 | News story | Manufacturing and Production |Â Â PatheonÂ
A hostile takeover bid for Canadian contract manufacturer Patheon by private equity firm JLL Partners has been blocked by the Ontario Securities Commission.
JLL has been circling Patheon for some months but closed in officially last month with a $2-per-share bid directed at holders of restricted voting shares in the company.
Patheon almost immediately dismissed the bid as 'inadequate' and 'opportunistic', saying it undervalued the firm and was taking advantage of volatility in its share price.
The CMO, which also provides contract drug development services, has seen its business pegged back in recent years by its acquisition of Puerto Rican contract manufacturing company MOVA Pharmaceuticals in 2004.
Latterly a restructuring exercise put in place by chief executive Wes Wheeler has had a dramatic impact, returning the firm to profit in 2008 despite a tough operating environment for contract manufacturers, although the costs of that programme meant Patheon slipped back into the red in the first quarter of 2009.
In its defense against the JLL bid, Patheon had complained that an overture made by the private equity group to a select group of shareholders – known as the MOVA Group – was unfair as it did not treat all shareholders equally. The OSC agreed, and JLL has agreed to withdraw that side deal and refrain from setting up any others while it is seeking to take over Patheon.
JLL, which has just completed the acquisition of contract research organisation PharmaNet, seems committed to its pursuit of Patheon. The private equity firm has extended the deadline for its $2 offer to 7 May, saying it is "an outstanding liquidity opportunity for holders of a very thinly traded stock at a significant premium to market".
Oral contraceptives move
Meanwhile, despite the distraction of fending off JLL's advances, business seems to be continuing as normal at Patheon, with the firm continuing to announce deals and investments in its restructuring programme.
In the latest move the CMO said it is expanding a manufacturing facility in Toronto to beef up its production of oral contraceptives. The expansion adds 10,000 sq. ft. of space dedicated to production of oral contraceptives, with a potential output of 1.3 billion tablets a year.
The expansion adds full-scale commercial production capabilities – including dispensing, granulation, compression, film coating and primary packaging – and is designed to meet regulatory requirements to sell oral contraceptives in many countries, said Patheon.
Patheon said the move also allows it to free up manufacturing capacity at the Toronto plant for other projects.
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