Mylon Laboratories to acquire up to 71.5% Controlling Interest in Matrix Laboratories

Matrix Laboratories Ltd has announced that Mylan Laboratories Inc and the Company on August 28, 2006 has announced that Mylan will acquire up to 71.5% of the Company´s shares outstanding for Rs 306 per the Company´s share. Under the terms of the transaction, Mylan will purchase 51.5% of the Company´s shares outstanding pursuant to an agreement with certain selling shareholders and will make an "open offer" to the Company´s remaining shareholders to acquire up to an additional 20% of the Company´s shares outstanding. Assuming the open offer is fully subscribed, the total purchase price is expected to be approximately $736 million. The Company will remain a publicly traded company in India and will continue to operate on an independent basis.

N Prasad, Executive Chairman of the Company, who will join Mylan´s Board of Directors and executive management team, said, "Mylan, a proven industry leader, is an ideal partner for Matrix. Our strategic vision remains unchanged and we believe this transaction creates greater growth opportunities for Matrix and its employees and also will allow us to accelerate our existing expansion plans in India and abroad."

Mr Prasad continued, "This transaction also offers significant benefits for our customers. Together, our companies will be able to compete more effectively, while delivering cost savings to our customers. The additional financial resources Mylan brings us also will allow us to further enhance Matrix´s capabilities in manufacturing and product development and expand Docpharma´s portfolio and presence across Europe. We look forward to drawing on Mylan´s strengths to advance our anti-viral initiatives, as we believe bringing these products to patients at lower costs is critical."

Transaction Details:

Under terms of the transaction, approved by Mylan´s Board of Directors, Mylan will acquire up to 71.5% of the Company´s shares outstanding.

Mylan will acquire approximately 51.5% of the Company´s shares outstanding for Rs 306 per share in cash pursuant to an agreement with certain selling shareholders. Mylan will acquire all the Company´s shares currently owned by (i) Temasek (Mauritius) Pte Ltd (an investment vehicle of Singapore Government-owned Temasek Holdings), (ii) entities controlled by Newbridge Capital (a joint venture between Texas Pacific Group and Blum Capital Partners), and (iii) Spandana Foundation. As part of the same agreement with these shareholders, Mylan will acquire shares from the Company´s Chairman, N Prasad. After the transaction, N Prasad will continue to own 5% of the Company´s shares outstanding.

In addition, Mylan will make an open offer to the Company´s remaining shareholders to acquire up to 20% of the Company´s shares outstanding at the same Rs 306 per share price in cash. The open offer will take place in accordance with the relevant regulations and procedures of the Securities and Exchange Board of India (SEBI).

The transaction will be funded using Mylan´s existing revolving credit facility and cash on hand. A portion of the funds received by Newbridge, Temasek and N Prasad will be used to purchase newly issued shares of Mylan common stock. Newbridge has agreed to invest approximately $93 million, Temasek has agreed to invest approximately $46 million, and N Prasad has agreed to invest $25 million, each at a price per Mylan share of $20.85 (the average of Mylan closing share prices for the ten trading days prior to the announcement of the transaction), subject to certain regulatory approvals.

Mylan expects the transaction to be moderately accretive to management´s internal earnings estimates in fiscal 2008, the first full fiscal year following the anticipated closing of the transaction, and significantly accretive thereafter, excluding synergies, charges related to the transaction and the impact of amortization of intangible assets ("Cash EPS"). Mylan is reaffirming its adjusted EPS guidance (excluding stock option expense and transaction related costs) for fiscal 2007 of $1.35 to $1.55 per diluted share. In addition to reporting U.S. GAAP earnings per diluted share, upon closing, Mylan intends to provide Cash EPS.

Following the transaction, Mylan will continue to maintain a strong balance sheet, consistent with Mylan´s commitment to preserving a flexible capital structure. The transaction, expected to close in the calendar fourth quarter of 2006, is subject to satisfaction of all conditions to the purchase agreement with the selling shareholders, the closing of the open offer, and certain other customary closing conditions.

Source : Equity Bulls

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