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Paladin Labs makes hostile takeover bid for COLD-FX maker

Published: 21:10 10 Aug 2011 BST

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Paladin Labs (TSE:PLB), a diversified specialty pharmaceutical company, said it is making a hostile offer to buy all the remaining shares of COLD-FX maker Afexa Life Sciences (TSE: FXA) in a deal that values the company at about $56.7 million, in a bid to expand Paladin's over-the-counter drug business.

Montreal-based Paladin is offering Afexa stakeholders 55 cents per share – a 16% premium to Tuesday’s closing share price – and a 57% premium to the share price on July 14, the day before Paladin snapped up 15% of Afexa shares.

After Paladin acquired the shares, both companies entered exclusivity talks, but failed to produce a “negotiated transaction”, Paladin said, thus leading it to make an offer directly to shareholders.

"We believe we are making a very compelling offer, with a significant premium to the shareholders of Afexa,” Paladin CEO, Jonathan Goodman, said in a statement.

"Our offer provides an opportunity for Afexa shareholders to receive an immediate and attractive cash premium for their investment at a time when the outlook for Afexa is uncertain."

Under the terms of the offer, Afexa shareholders will be entitled to elect to receive either $0.55 per share in cash, or 0.013 of a Paladin share for each Afexa share.

By offering shares of Paladin, the company said it is giving Afexa shareholders the choice of continuing to have an interest in COLD-FX, which contributes most of Afexa's revenue, according to Paladin.

Afexa responded to the bid in a separate statement, to say that the Paladin offer "significantly undervalues" Afexa's business. Its board has established a special committee to review the offer, which expires September 15.

Paladin’s shares shot up 4.22% to $41.69, while Afexa’s share price jumped 85 cents to $0.560 on Wednesday afternoon.

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