Cold-FX maker Afexa Life Sciences (TSE:FXA) said Friday that its board has confirmed the recommendation that its shareholders accept the previously announced Valeant Pharmaceuticals (TSE:VRX) takeover offer, valued at $76 million.
Announced in late August, Valeant made a competitive bid for Afexa, beating out the hostile $56.7 million offer by Paladin Labs (TSE:PLB), announced earlier that month.
Under the terms of the deal, Valeant will buy Afexa for 71-cents per share in cash, well above the 55 cents per share Montreal-based Paladin proposed on August 10.
Afexa, whose revenue is derived primarily from Cold-FX medicine, had repeatedly said that the Paladin offer significantly undervalued its business. Paladin was hoping to expand its over-the-counter drug operations.
The circular that Afexa issued today said Valeant's offer provides "improved value" to shareholders, and represents a significant premium over the Paladin bid.
Indeed, the offer from Valeant represents a premium of 49% over Afexa's closing price the day before Paladin's hostile bid was made, and is 29% higher than Paladin's 55 cent offer.
It was also 49% more than Paladin's share consideration alternative - which said that 0.013 of a Paladin common share would be given for each Afexa share held - as of the day before Valeant made the bid.
Afexa retains the right to solicit and engage in discussions regarding other possible offers, until September 29. All directors and officers of the company have already entered into lock-up agreements with Valeant.
In other news, Afexa said it has appointed William B. White as interim CEO, to assist in the "orderly and efficient transfer" of responsibilities following the completion of the transaction.
Mississauga-based pharmaceuticals company Valeant, which has so far made several acquisitions this year, including the purchase of Sanofi's dermatology unit for $425 million, is primarily focused in the areas of neurology, dermatology and branded generics.
It has also been bulking up its drug line, buying the rights to market two drugs in the US and Canada in June, namely Elidel, which is used to treat eczema in both adults and children, and Xerese, a cold sore treatment.
In Toronto, Afexa shares started the day up by one cent, but leveled off at $0.73 as of 12:28 pm EDT. Valeant shares slipped 2.04% to $41.31.