MONTREAL and LAVAL, QUEBEC— Labopharm Inc. and Paladin LabsInc. have entered into a definitive agreement by which Paladin will acquire allof Labopharm's issued and outstanding shares of common stock for Canadian$0.2857 (US $0.291) per share in cash. The proposed price offers a 57.4 percentpremium over the volume-weighted average price of Labopharm's shares ofCanadian $0.1815 (US $0.185) for the 30 trading days prior to the announcement.Labopharm stockholders will be entitled to exercise their options or warrantsprior to the agreement's close, and all outstanding Labopharm stock options andwarrants will be cancelled.
"The acquisition of Labopharm represents a uniqueopportunity for us to further strengthen our pain franchise through theaddition of an established revenue stream in international markets with thepotential upside provided by several product candidates," said JonathanGoodman, Paladin's CEO, in a press release. "Moreover, Labopharm's emergingspecialty pharmaceutical technology platforms offer longer-term potential inpromising new drug fields. Labopharm's expertise and experience around itsproducts and technologies, both in Canada and internationally, will complementour existing capabilities as we execute our growth strategy."
Labopharm's Board of Directors approved the transactionafter a comprehensive review of the offer and its fairness to the company'sshareholders. The Board deemed the agreement to be in the best interest of thecompany and its shareholders and has recommended to the shareholders that theyvote in favor of the agreement.
"The offer from Paladin provides compelling value, certaintyand liquidity to our shareholders," said Santo J. Costa, Chairman of theLabopharm Board, in a press release. "Following a comprehensive review of alternatives under thepreviously announced strategic review, the Board of Directors has concludedthat this all-cash offer, which is at a significant premium to the tradingprice of Labopharm's shares, is the best way to maximize shareholder value."
The closing of the transaction is subject to customaryconditions, including the approval of 66 2/3 percent of the votes ofLabopharm's shareholders present or represented at a special meeting convenedfor the purpose of voting on the agreement. The closing is also subject to theapproval of the Superior Court of Quebec. The shareholder voting meeting isexpected to take place in early October, with details of the agreement to besent to shareholders in early September.
In keeping with the agreement, Labopharm is subject tocustomary non-solicitation covenants, and Paladin maintains the right to matchany unsolicited superior proposal which Labopharm might accept. If theagreement should happen to be terminated, as a result of either the Board ofDirectors changing its recommendation or if Labopharm terminates the agreementin favor of entering a superior proposal, Labopharm is required to pay Paladin$750,000 as a termination fee.
In the company's consideration of the agreement, CanaccordGenuity Corp. was brought on as Labopharm's financial advisor, as well asprovision of a fairness opinion. Labopharm brought on Norton Rose OR LLP as itslegal counsel for the agreement. Paladin brought on Davies Ward Phillips andVineberg LLP as its legal counsel for the agreement.
SOURCE: Labopharm press release