Mylan plans open offer to acquire 100% in Matrix Lab; to delist firm

Written by Corporate Bureau | Mumbai | Updated: Mar 29 2009, 04:16am hrs
Close on the heels of Swiss firm Novartis AG announcing an open offer to have over 90% stake in its Indian subsidiary, US company Mylan Inc has said it will acquire 100% stake in its Indian arm, Matrix Laboratories, for enhanced flexibility and efficiencies.

Shares of Hyderbad-based Matrix Laboratories went up 20% to hit the upper circuit on Friday after Mylan said it plans to acquire the 29% it does not own in the Indian firm and delist Matrix from the bourses.

Mylan, through a wholly owned subsidiary, owns about 71.2% of Matrix and controls more than 76% of the voting rights.

The US firm plans to acquire the remaining 45 million shares for Rs 150 each, spending $133 million (around Rs 665 crore). On Friday, Matrix shares closed at Rs 141.40, up Rs 23.55 or 19%.

On Wednesday, Novartis AG, had said it will pick up an additional 39% stake in its Indian subsidiary, Novartis India Ltd, through an open offer. It is widely expected that Novartis India will also be delisted from the Indian exchanges.

Robert J Coury, vice-chairman & CEO, Mylan, said, Purchasing the remaining interest in Matrix and delisting it from the exchanges will provide Mylan an opportunity for enhanced flexibility and efficiencies in managing our global technical and commercial operations platform. This move represents another step toward achieving our goal of becoming the most efficient global generics and specialty pharmaceutical company in the industry. The transaction would also provide Matrixs public shareholders with an attractive near-term liquidity opportunity.

Mylan has approved an indicative acquisition price of up to Rs 150 per share. This price reflects a premium of 27% over the closing share price of Matrix on March 26, the last trading day before the announcement. It also represents a premium of 54% and 77%, respectively, over Matrixs average share price during the last month and last six months.

The delisting process is expected to take nearly 12 weeks, subject to obtaining regulatory approvals. Mylan intends to fund the purchase using the current cash balances, a company statement said.

Matrix Laboratories, maker of active pharmaceutical ingredients (API) and solid oral dosage forms, has a range of products in central nervous system, anti-bacterial, anti-AIDS, anti-asthmatic, cardiovascular, gastrointestinal, anti-fungal, pain management and life style related therapeutic segments.

All its API and finished dosage facilities are approved by US FDA. For the financial year ended March 2008, the company had net sales of Rs 1,728 crore, a year-on-year growth of 5%. Consolidated profit before tax for the year stood at Rs 79 crore.

Matrix has the worlds third-largest portfolio of APIs and intermediates. It has several operating units, including a network of API manufacturing facilities across India and China.