The Hindu Business Line : Mylan to buy Matrix for $736 m

Mylan Laboratories of the US on Monday announced its decision to acquire up to 71.5 per cent equity in the Hyderabad-based Matrix Laboratories Ltd at Rs 306 per share, translating into an acquisition cost of $736 million (Rs 3,367 crore).

Mylan would initially purchase 51.5 per cent of Matrix's equity through an agreement with certain shareholders - the chief promoter of Matrix and its Executive Chairman, Mr N. Prasad, and private equity funds Temasek and Newbridge.

Subsequently, Mylan would make an open offer to Matrix shareholders to acquire up to an additional 20 per cent equity.

The Mylan Vice-Chairman and CEO, Mr Robert J. Coury, would assume the responsibility of non-Executive Chairman of Matrix.

Mr Prasad, who would retain a minority stake of five per cent in Matrix post-deal, would continue on the board of Matrix as non-Executive Vice-Chairman.

Further, he would invest around $25 million in Mylan and join its board of directors and the executive management team as head of global strategies.

Merrill Lynch and DSP Merrill Lynch acted as exclusive financial advisors to Mylan for the transaction.

DSP Merrill Lynch would also serve as Mylan's merchant banker for the proposed open offer.

ABN Amro and UBS Limited have acted as financial advisors to the selling shareholders of Matrix - Mr N. Prasad, Temasek and Newbridge.

Mylan would fund the transaction through its existing revolving credit facility and using cash on hand.

Temasek and Newbridge have agreed to invest a portion of their sale proceeds to purchase newly issued shares of Mylan common stock.

Newbridge has agreed to invest around $93 million, while Temasek would invest $46 million.

Following the deal, Mylan and Matrix together would have approximately 5,100 employees in 10 countries.

Matrix would provide Mylan with a significant presence in important emerging pharmaceutical markets, including India, China and Africa.

The deal would also provide Mylan with a European footprint and distribution network through Matrix's Docpharma subsidiary.

By combining Matrix's active pharmaceutical ingredient and drug development business with Mylan's expertise in finished dosage forms, the transaction would allow Mylan to capture incremental pieces of the value chain through backward vertical integration, according to a joint release from the companies.

The Mylan Vice-Chairman and CEO, Mr Robert J. Coury, said: "This is an extremely complementary transaction that accomplishes a number of Mylan's key objectives. Mylan is executing on its commitment to establish a global platform and expand its dosage forms and therapeutic categories. Additionally, this acquisition deepens Mylan's vertical integration and enhances its supply chain capabilities. The transaction will allow Mylan and Matrix to strengthen and expand their core businesses and competencies, while creating significant opportunities for global expansion and growth."

Commenting on the deal, the Matrix Executive Chairman, Mr N. Prasad, said: "Mylan, a proven industry leader, is an ideal partner for Matrix. Our strategic vision remains unchanged and we believe that 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."

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