News
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.
