Mylan Laboratories pays $736 million for control of Matrix

In a move to boost its existence in emerging pharmaceutical markets in India, Mylan Laboratories Inc., an American generic pharmaceuticals company, today (Aug 28,2006) announced to buy up to 71.5 percent of Indian drug maker Matrix Laboratories Ltd.

For the acquisition, the Pittsburgh, Pennsylvania based US generic drug maker agreed to pay as much as $736 million to the Indian firm, making it the biggest acquisition involving a pharmaceuticals company in the South Asian country.

In a statement, Mylan said it will buy 51.5 percent of Matrix's from its shareholders including Singapore's Temasek Holdings Pte and Newbridge Capital LLC and also make an open offer to Matrix's remaining shareholders to acquire up to an additional 20 percent, at 306 rupees ($6.6) a share. That is a premium of 10 percent to the closing price on Aug. 25.

“Assuming the open offer is fully subscribed, the total purchase price is expected to be approximately $736 million,” the companies’ statement unleashed. “Matrix will remain a publicly traded company in India and will continue to operate on an independent basis.”

About its association with the Matrix, Mylan, which manufactures and markets over 140 generic products in approximately 360 product strengths, covering over 40 therapeutic categories, said the Indian firm will provide a significant existence in important emerging pharmaceutical markets including India, China and Africa, as well as a European footprint and distribution network through Matrix's Docpharma subsidiary.

Supporting the statement of the companies, Viswanathan Vasudevan, who helps manage $185 million at Aquarius Investment Advisors Pte in Singapore, said, “There will definitely be a broadening of the market of Matrix and it will give more depth, reach and coverage for the company,'' adding that Mylan will “get a base in a place like India where labor is cheap and use India as a base for distribution through Asia.''

Mylan and Matrix together will employ nearly 5,100 workers in 10 countries.

International drug makers, who are aiming to be more competitive, are considering Indian companies whose production costs are among the lowest in the world, for drug manufacturing facilities approved by regulatory agencies including the U.S. Food and Drug Administration (FDA).

Generic drugs form 50 percent of prescriptions in the U.S. from 18 percent in 1984, Mylan flashed on its Web site.

The deal is likely to close in the 2006 calendar fourth quarter, and will be funded using US firm's existing revolving credit facility and cash on hand. Mylan also ratified its fiscal 2007 and readjusted earnings per share while excluding stock option cost along with transaction related costs, of $1.35 to $1.55 per diluted share.

The shares of Secunderabad based India's seventh-biggest drug company by market value, Matrix, rose 5.8 rupees, or 2.1 percent, to 282.95 rupees at 10:36 a.m. (IST) on the Bombay Stock Exchange (BSE), having risen as much as 7.2 percent earlier.