* Valeant offer for C$0.85/share, subject to conditions
* Offer tops C$0.81/share hostile bid by Paladin
* Afexa makes Canada’s No. 1 flu medicine
By Pav Jordan
TORONTO, Sept 25 (Reuters) - Acquisition-hungry Valeant Pharmaceuticals International (VRX.TO) said on Monday it plans to raise its takeover offer for Afexa Life Sciences FXA.TO to C$88 mln ($85.4 million), topping Paladin Labs’ hostile bid for the maker of Cold-FX flu medicine.
Valeant’s proposal to buy Afexa shares at 85 Canadian cents each came hours after Paladin raised its offer to 81 Canadian cents, underscoring the intensity of the race by the pharmaceutical companies to acquire approved and marketable drugs.
Afexa, which makes Canada’s No. 1 selling cold and flu medicine, agreed on Aug. 30 to be acquired by Valeant for 71 Canadian cents a share. Paladin trumped that bid earlier Monday with an offer of 81 Canadian cents.
Afexa had more than 103 million common shares outstanding as of Aug. 29, according to a circular issued by Afexa.
The takeover saga for Afexa started on Aug. 10, when Paladin offered to buy the company for 55 Canadian cents a share, or some C$57 million.
Few had expected Valeant to step into the fray just weeks later and even fewer would have expected it to react in just hours to Paladin’s latest increase.
“While we normally don’t participate in an auction process, given that our existing offer has the full support of the board and management of Afexa, we felt it was appropriate to continue to respond quickly to Paladin’s hostile overtures,” Valeant Chief Executive Michael Pearson said in a written statement.
Valeant has lockup agreements with directors and officers of Afexa representing 9.3 percent of the issued and outstanding common shares.
The offer from Valeant, which failed earlier this year to buy Cephalon Inc CEPH.O for $5.7 billion, is subject to certain conditions, including an agreement by Afexa to reduce minimum tender requirements.
“We have decided to offer a premium to Paladin Labs’ most recent proposal as we are able to attribute more value than Paladin to the Afexa business given both our larger scale and resources in Canada, coupled with our extensive international consumer footprint,” Pearson said.
Mississauga, Ontario-based Valeant, which focuses on dermatology and neurology products, and Montreal-based Paladin have each been aggressive acquirors this year.
Paladin specializes in buying distribution rights to specialty over-the-counter and prescription pharmaceutical products. It recently bought Labopharm Inc DDS.TO, a Canadian biotech company specializing in controlled-release drugs, in a C$20 million friendly deal.
Paladin was not available for immediate comment.
Reporting by Pav Jordan in Toronto; Editing by Frank McGurty