US generic group Mylan Laboratories said yesterday it is planning to shell out $736 million for an up to 71.5% stake in Indian drugmaker Matrix Laboratories, under a move which will help it gain a strong foothold in emerging markets.
Mylan’s offer of to buy 51.5% and up to a further 20% of Matrix’ stock at 306 rupees a share – more than 10% over Friday’s closing price – values the Hyderabad-based group, which holds a place on India’s top ten pharmaceutical companies scoreboard - at more than $1 billion. The deal, which should be accretive to earnings from 2008, is expected to close in the fourth quarter of this year.
As well as providing access to important markets such as India, China and Africa, the move will give Mylan an important distribution vessel in Europe in the form of Matrix’ subsidiary Docpharma, which markets branded generics from its headquarters in Belgium.
Even so, news did not sit all that well with Mylan’s shareholders, who are perhaps concerned about the deal’s seemingly high price. Shares eventually closed down 1.6% at $20.28 yesterday, after a day of extremely heavy trading on the New York Stock Exchange.