Valeant bids for Cold-FX maker Afexa

Valeant Pharmaceuticals International Inc. has joined the fray to acquire Afexa Life Sciences Inc. with a $76-million bid for the Alberta-based maker of the popular Cold-FX flu remedy and driving its stock up more than 20 per cent.

Valeant's friendly offer, announced Tuesday, easily topped a hostile, $56.7-million bid by Montreal-based Paladin Labs Inc.

Under terms of the Valeant offer, Afexa shareholders would receive 71 cents in cash per common share, a 30 per cent premium over Afexa's 30-trading day volume average on the Toronto Stock Exchange.

Valeant, the former Biovail Corp., said its bid also represented a premium of 29 per cent to Paladin's cash consideration and a 49 per cent premium to its alternative share consideration based on Paladin's closing price of $36.74 on Monday.

On the Toronto Stock Exchange, Afexa stock, which had been halted pending the announcement, rose 14 cents to 73 cents when trading resumed, then fell back to at 12-cent gain to 71 cents by midday.

Paladin share were off 36 cents at $36.38, while Valeant stock was down 34 cents at $44.20.

"We are pleased to have the full support of Afexa's management team and board of directors for a transaction that we believe should deliver significant benefits to our customers, employees and shareholders," Valeant chairman and CEO Michael Pearson said in a release announcing the offer.

"Afexa's strong franchise of consumer brands, including Cold-FX, Canada's leading over the counter cold and flu treatment, will be a solid addition to our developing OTC product portfolio in Canada." Pearson added.

He said Afexa's product line, combined with Valeant's portfolio, would provide "the critical mass we need in the OTC market and should provide Valeant Canada with another platform for growth."

Afexa management had earlier advised it's shareholders to reject Paladin's overture while it considered better bids.

Company chairman William White said last week that the Paladin offer, which he said amounted to 55 cents per share, was only a five per cent premium to the weighted average price of Afexa stock through the first half of the year.

"The offer actually doesn't even adequately compensate against the value of the lead product, Cold-FX," White said.

Besides Canada, Cold-FX is now available in Hong Kong and there are plans to have it sold in the United States, China and Japan, significantly increasing the company's revenues.

"The future value to shareholders into those markets is much greater than the value we are currently able to deliver just in the Canadian market," White said.

The remedy has been promoted by Olympic figure skating champion Joannie Rochette and TV personality and former NHL coach Don Cherry.

Valeant Pharmaceuticals International, Inc. is a multinational, specialty pharmaceutical company that develops, manufactures and markets a range of pharmaceutical products.

Paladin Labs Inc. is a specialty pharmaceutical company focused on developing, acquiring, in-licensing, marketing and distributing pharmaceutical products.