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- Paladin Labs becomes Litha's largest shareholder and international strategic partner

Tue, 02/21/2012 - 3:46am
The Associated Press

(http://www.paladin-labs.com)

Paladin Labs Inc. (TSX: PLB) ("Paladin") today announced that it has

entered into a strategic partnership whereby Paladin will accelerate

its buy-out of the remaining 55.01% of Pharmaplan (Pty) Limited

("Pharmaplan") and merge the Pharmaplan business with the pharma

division of Litha Healthcare Group Limited. (JSE: LHG) ("Litha") ("the

transaction").

This represents the most significant strategic corporate expansion

initiative to date for Paladin and is a decisive move to build

critical mass and competitive differentiation in the South African

pharmaceutical market which is currently valued at over $3.3 billion

(25.3 billion South African Rand ("ZAR")), an increase of 10% over

2010(1).

"This strategic partnership with Litha creates a stronger and more

diversified commercial platform from which to extend our footprint in

Sub-Saharan Africa," said Mark Beaudet, interim President and Chief

Executive Officer of Paladin Labs Inc. "The combination creates a

locally empowered business with the commercial breadth to be a leader

in the rapidly growing African healthcare markets of interest to us.

Our combined focus on business development, sales and marketing and

broad healthcare interests via pharmaceuticals, vaccines and medical

devices will make us a formidable competitor for the long run on the

African continent."

Litha currently operates within the pharmaceutical, vaccine and

medical device markets and the enlarged company will now possess

enhanced commercial capability, portfolio breadth and local

empowerment. The merged group will look to solidify its business model

in South Africa, as well as to further expand its African footprint in

the sub-Saharan African healthcare market.

The strategic partnership between Paladin and Litha will build scale

and open up further direct international licensing opportunities for

the Litha Pharma Division, increasing deal flow and product

acquisition opportunities. Moreover, with the combination of

Pharmaplan, the Litha Pharma Division will become the Litha Healthcare

Group's second largest division by revenue and most profitable by

earnings.

"Pharmaplan is one of the fastest growing specialist pharmaceutical

companies in South Africa, with an enviable market position in the

private specialist and niche generics markets. The merging of our

pharma division with Pharmaplan will not only boost our current

product portfolio revenues, but also broaden our access to

international pipelines and improve our current platform for expansion

into new markets including biotech, oncology and aesthetic medicine."

said Selwyn Kahanovitz, Chief Executive Officer of Litha Healthcare

Group Limited.

Under the terms of the transaction, Paladin will acquire the 55.01% of

Pharmaplan which it does not currently own. Litha will then acquire

100% of the share capital of Pharmaplan from Paladin in exchange for

cash and the issuance of 169,090,909 shares in Litha at ZAR2.75 per

share. Paladin has also agreed to acquire an additional 72,989,078

shares of Litha from the Blackstar Group at ZAR2.75 per share. Paladin

will deploy an anticipated $48 million in cash and issue 88,948 shares

at $44.97 per share to complete the combined transactions. As a result

Paladin will own 44.52% of Litha, making it Litha's single largest

shareholder upon closing.

Dr. Gert Hoogland, founder and CEO of Pharmaplan will head up the

Litha Pharma Division, reporting to the Litha Healthcare Group CEO

Selwyn Kahanovitz. In order to leverage strategic synergies and

intra-company collaboration, Litha has also asked Dr. Hoogland

together with Paladin's interim President and CEO, Mark Beaudet, and

its VP of Business and Corporate Development, Mark Nawacki, to join

Litha's Board of Directors effective the closing date.

The transaction is expected to be accretive to Paladin's EBITDA(2)

immediately upon closing. For perspective, had the transaction taken

place effective January 1, 2011, Paladin would have reported at least

an additional $25 million dollars in EBITDA for 2011. The transaction

is subject to certain regulatory approvals including South African

competition review and approval by shareholders of Litha and is

expected to close on July 2, 2012.

Conference Call Notice

Paladin will also host a conference call to discuss this announcement

on Tuesday February 21, 2012 at 9:00 a.m. EST. The dial-in number for

the conference call is 1-888-225-7937 or (416) 981-9070. The call will

be audio-cast live and archived for 15 days at

www.paladinlabs.com(http://www.paladinlabs.com).

About Paladin Labs Inc.

Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty

pharmaceutical company focused on acquiring or in-licensing innovative

pharmaceutical products for the Canadian and world markets. With this

strategy, a focused national sales team and proven marketing

expertise, Paladin has evolved into one of Canada's leading specialty

pharmaceutical companies. Paladin's shares trade on the Toronto Stock

Exchange under the symbol PLB. For more information about Paladin,

please visit the Company's web site at

www.paladinlabs.com(http://www.paladinlabs.com).

About Pharmaplan (Pty) Ltd

Pharmaplan is a fast growing pharmaceutical company which represents

small to medium sized international Principals in South Africa and

other selected sub-Saharan territories. The company offers a full

service of registering, importing, promoting and distributing the

products of its Principals exclusively to all wholesalers, hospitals

and clinics in South Africa and selected neighbouring countries. The

Company employs 75 people, and according to IMS data(1), is ranked the

8th top generic company in South Africa.

Pharmaplan has been a registered importer and distributor of niche

speciality/biotechnology medicines since 1996 and sells products from

the US, Europe, India and New Zealand. Pharmaplan markets products in

a range of therapeutic areas which include oncology, dermatology,

nephrology, paediatrics, gynaecology, surgery, radiology, neurology,

cardiology and psychiatry.

Pharmaplan has a solid market base in the originator, specialist

prescription medicine market and does not directly compete with

'commodity' generics.

For more company information please go to:

www.pharmaplan.co.za(http://www.pharmaplan.co.za)

About Litha Healthcare Group Limited

Litha Healthcare Group Limited is a JSE-listed integrated healthcare

company with a varied product offering in: biotechnology/vaccines,

pharmaceuticals, medical devices and cold chain logistics. The group

holds 46 international agencies and has extensive contracts in both

the public and private healthcare sector. LHG has seen its share price

rise from 45c in March 2009 to its current price of 288c. Litha

Healthcare Group also has a significant stake in The Biovac Institute

which is a Public Private Partnership (PPP) between the SA Government

and The Biovac Consortium to produce vaccines in South Africa and is

currently the sole supplier of vaccines to the public healthcare

department under the Extended Programme of Immunisation (EPI).

Litha Pharma is a Division of Litha Healthcare Group Limited and

comprises two business units: Branded/detailing doctor business unit -

Pharmafrica (Pty) Ltd and a Generic/pharmacy/dispensing doctor

business unit - Goldex Healthcare (Pty) Ltd and recently acquired OTC

Pharma SA (Pty) Ltd. The current product portfolio comprises 117

product line items with 34 of them owned by Litha. The extended

product portfolio includes cold and flu preparations,

NSAIDS/analgesics, cardiovascular agents, anti-histamines, ophthalmic

agents, anti-microbials, anti-psychotics, anti-depressants,

nutritional supplements, homeopathic remedies, skin and anti-ageing

creams. All media releases and other company information is available

at: www.lithahealthcare.co.za(http://www.lithahealthcare.co.za)

Forward-Looking Statements Related to Paladin

This press release may contain forward-looking statements and

predictions. These forward-looking statements, by their nature,

necessarily involve risks and uncertainties that could cause actual

results to differ materially from those contemplated by the

forward-looking statements. The Company considers the assumptions on

which these forward-looking statements are based to be reasonable at

the time they were prepared, but cautions that these assumptions

regarding the future events, many of which are beyond the control of

the Company and its subsidiaries, may ultimately prove to be

incorrect. Factors and risks, which could cause actual results to

differ materially from current expectations, are discussed in the

annual report as well as in the Company's Annual Information Form for

the year ended December 31, 2010. The Company disclaims any intention

or obligation to update or revise any forward-looking statements

whether as a result of new information or future events and except as

required by law. For additional information on risks and uncertainties

relating to these forward-looking statements, investors should consult

the Company's ongoing quarterly fillings, annual report and Annual

Information Form and other fillings found on SEDAR at

www.sedar.com(http://www.sedar.com).

(1) IMS Health MAT Dec 2011

(2) EBITDA - Non-IFRS Financial Measures

The term EBITDA (earnings before interest, taxes, depreciation and

amortization) does not have any standardized meaning under

International Financial Reporting Standards ("IFRS") and therefore may

not be comparable to similar measures presented by other companies.

The Company defines EBITDA as earnings before interest expense, other

finance (income) expense, taxes, amortization, foreign exchange gains

(losses), share of net income in an associate and unusual items; such

as write-downs and gains (losses) on intellectual property and

investments. EBITDA is calculated and presented consistently from

period to period and agrees, on a consolidated basis, with the amount

disclosed as "Earnings before under-noted items" on the consolidated

statements of income. The Company believes EBITDA to be an important

measurement that allows it to assess the operating performance of its

ongoing business on a consistent basis without the impact of

amortization expenses. The Company excludes amortization expenses

because their level depends substantially on non-operating factors

such as the historical cost of intangible assets. The Company's method

for calculating EBITDA may differ from that used by other issuers and,

accordingly, this measure may not be comparable to EBITDA used by

other issuers.

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