Paladin Labs makes $50 million takeover bid for Afexa Life Sciences

MONTREAL, Quebec— Specialty pharmaceutical company PaladinLabs Inc. has announced that the company has made an offer to acquire any andall of Afexa Life Sciences Inc.'s issued and outstanding shares for $0.55 pershare.

The offer follows a July 15 announcement that Paladin hadbought enough shares to have beneficial ownership of 15,421,300 shares of Afexacommon stock, representing approximately 14.94 percent of Afexa's total issuedand outstanding common shares. The purchase prices for the shares fell between$0.36 and $0.55 per share. Paladin then approached Afexa for negotiations.Under an exclusivity and standstill agreement, the companies discussed otheralternatives, but failed to reach an accord by August 5, when the agreementexpired, prompting Paladin to make its acquisition offer to Afexa'sstockholders.

Paladin's offer represents a 57 percent premium to the priceof Afexa's shares on July 14, and a 43 percent premium to the volume weightedaverage trading price of Afexa's shares over the span of the 20 days up to andincluding July 14. The offered price of $0.55 per share also represents apremium of approximately 16 percent over the closing price of $0.475 that theshares stood at as of August 9, the last day before Paladin commenced itsoffer.

"We believe we are making a very compelling offer, with asignificant premium to the shareholders of Afexa," said Jonathan Ross Goodman,President and Chief Executive Officer of Paladin, in a press release about theoffer. "Our offer provides an opportunity for Afexa shareholders to receive animmediate and attractive cash premium for their investment at a time when theoutlook for Afexa is uncertain."

Under the terms of the offer, Afexa's shareholders will havethe option to tender their shares for $0.55 per share in cash or 0.013 of aPaladin share for each share of Afexa stock.

Paladin's offer is available until September 15, and,assuming that all of the remaining shares not already purchased by Paladin aretendered, the offer has a total value of approximately $50 million. Theacquisition offer is subject to certain customary conditions, including TSXapproval to list additional shares of Paladin stock in exchange for Afexashares; a waiving or invalidation of the Afexa Shareholder Rights Plan, or ifit is cease traded; and a determination by Paladin that the completion of theoffer will likely not have a material adverse effect. The offer has no minimumtender condition and is not subject to either due diligence or financingconditions.

"We are also offering Afexa shareholders the choice ofcontinuing to have an interest in COLD-FX and in the specialty pharmaceuticalsector by accepting shares in Paladin, a diversified, profitable and rapidlygrowing company whose shares have significantly outperformed Afexa and themarket generally over the past five years," said Goodman.

In response to the offer, Afexa posted a press release onits company website stating that its Board of Directors "believes the PaladinOffer significantly undervalues Afexa's business." The company added that acommittee had been formed to review the offer, and urged shareholders not toact on the offer until it had been fully reviewed, noting that a circularregarding the takeover bid would be issued within fifteen calendar days.

Afexa has brought on Scotia Capital Inc. as its exclusivefinancial advisor, and Fraser Milner Casgrain LLP as its legal counsel.

Afexa is a health sciences and technology company thatfocuses on "pioneering evidence-based natural medicines that empower people toachieve their health potential." The company's lead product, COLD-FX, is anover-the-counter product meant to prevent and treat colds, reducing thefrequency, severity and duration of both cold and flu symptoms by boosting apatient's immune system.