By Scott Anderson
TORONTO (Reuters) - U.S. private equity firm TPG Capital
plans to pay $1.3 billion for Canadian pharmaceutical company
Axcan Pharma
TPG said on Thursday it will pay $23.35 a share for all of the common shares of Axcan, whose products focus on the treatment of gastrointestinal disorders.
The offer is a 28-percent premium over the stock's closing price of $18.20 on Nasdaq on Wednesday. It closed at C$17.96 on the Toronto Stock Exchange.
The shares were $4.36, or 24 percent, higher at $22.56 on Nasdaq at midafternoon on Thursday. On the Toronto Stock Exchange, they were up C$4.54, or 25.3 percent, at C$22.50.
The deal gives TPG, one of the biggest private equity firms in the world, a wide portfolio of products geared toward gastrointestinal problems, including Urso, Axcan's treatment for cholestatic liver diseases.
Analysts said the timing of the deal was good for Axcan, which is set to face heightened generic competition for its treatments.
"(Generic competition) has put a lot of pressure on the stock," said Prakash Gowd, an analyst at National Bank Financial. "With this deal the timing is appropriate as it is a way for the company to balance these near-term operational risks with a desire on growing the business in the absence of capital market distractions."
Axcan and several other Canadian biotech companies such as
Biovail Corp
MOMENTUM COULD SLOW
Also on Thursday, Axcan said it doubled its fourth-quarter earnings with a profit of $16.8 million, or 30 cents a share, for the period ended September 30, up from $8.3 million, or 17 cents a share, for the same period a year earlier.
Analyst Laurence Terrisse-Rulleau at Blackmont Capital in Montreal said the company would have been hard-pressed to duplicate its stellar 2007 results in the years ahead without making a significant acquisition.
"They have beaten expectations in three quarters this year. I don't think they can do that in 2008, so the momentum is not going to be the same," Terrisse-Rulleau said.
"They have grown the business as much as they can and to get to the next level of growth you have to do an acquisition. ...In order to go the next level, why don't you take the full benefit of what you have done so far, which is the realization of the deal announced this morning."
Axcan's board has accepted the TPG offer and recommends that shareholders also accept the deal.
Axcan spokeswoman Isabelle Adjahi said she did not expect a bidding war.
"That's not the objective," she told Reuters. "I think we have a clean and clear process. It was approved by the board and we are recommending that shareholders accept the offer."
Axcan said the transaction is expected to close in the first quarter of 2008. Once it is completed the company will be delisted. It will retain its headquarters in Quebec.
TPG declined comment on the deal.
(Reporting by Scott Anderson; Editing by Peter Galloway)
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