Hospira to acquire Mayne Pharma for A$2.6 billion

By Angela McDaniels

Seattle, Sept. 20 - Hospira, Inc. has agreed to acquire Mayne Pharma Ltd., according to a company news release.

Under the agreement, Mayne shareholders will receive A$4.10 per outstanding ordinary share of Mayne, or a total equity consideration of A$2.6 billion, including options. The transaction represents a 32% premium over Mayne's closing price on Monday.

"The Mayne acquisition more than doubles Hospira's international presence and significantly accelerates the expansion of our generic injectables business," Hospira chief executive officer Christopher B. Begley said in the release.

The transaction is subject to Mayne shareholder, regulatory and court approvals and to customary closing conditions. Assuming all necessary approvals are secured, the transaction is expected to be completed by the end of 2006.

Hospira estimated that the combination of the two companies will generate a minimum of $50 million of annualized synergies in 2008. The company expects to achieve annual savings through infrastructure optimization as well as improved supply chain, administrative and other operational efficiencies.

To finance the acquisition, Hospira will use available cash and incur $1.9 billion of debt under committed financing facilities provided by Morgan Stanley. Using Hospira and Mayne's strong combined cash flow, Hospira said it plans to pay down the debt "as quickly as feasible."

Morgan Stanley is acting as financial adviser and Baker & McKenzie is acting as legal adviser to Hospira. Merrill Lynch is acting as financial adviser and Clayton Utz is acting as legal adviser to Mayne Pharma.

Hospira is a specialty pharmaceutical and medication delivery company based in Lake Forest, Ill.

Mayne Pharma is a specialty pharmaceutical company based in Melbourne, Australia, with a focus on oncology products.

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