Lonza rides to the rescue of Patheon with a $460 million bid

Switzerland's Lonza Group, leading suppliers to the pharmaceutical, health care and life science industries, has submitted a non-binding proposal to acquire all of the outstanding Restricted Voting Shares of Canada-based Patheon at a price of $3.55 per restricted voting share, equal to around $460 million for the firm.

Lonza's bid comes after private equity firm JLL Partners made a hostile takeover bid in March offering $2 per restricted voting share. Lonza has signed a confidentiality and standstill agreement with Patheon, while Patheon has agreed not to negotiate a transaction with any party other than Lonza for a period ending 30 September 2009. The Lonza proposal does not commit either party to complete any transaction.

'Our interest in Patheon is consistent with Lonza's stated strategy of expanding our offering across the pharmaceutical manufacturing value chain. An acquisition of Patheon would take us into the complementary activities of finished dosage development and manufacturing for both small molecule and biological active ingredients. With Patheon, Lonza would be in a unique position to offer its customers manufacturing capability across the complete supply chain,' said Stefan Borgas, chief executive of Lonza.

Paul Currie, chairman of the Special Committee of Independent Directors of Patheon, said that, if completed, a transaction at the price proposed by Lonza would be a significant improvement in value for Patheon shareholders above the current offer from JLL.

'Based on all of the information available to it, the Special Committee's view has been that Patheon continuing as an independent company is a more attractive alternative than the JLL offer,' Mr Currie said. 'The Special Committee also believes that the Lonza proposal would provide an excellent opportunity to secure the successful future development of Patheon, and that it is in the best interest of all Patheon shareholders to explore the Lonza proposal further.'

The transaction contemplated by the Lonza proposal would be subject to Lonza being satisfied with the completion of its confirmatory due diligence investigations, the parties entering into definitive documentation, and the approval of each party's Board of Directors. There can be no assurance that any such transaction will be completed or as to the terms of any such transaction.