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Mylan To Buy Matrix for $735 Million


Posted on 2006-08-28 14:20:00



U.S. generic drugmaker Mylan Laboratories Inc.  said on Monday it would buy up to 71.5 percent of Matrix Laboratories Ltd. \for about $735 million in India's biggest drug industry takeover as it seeks to expand into emerging markets.

Mylan, which saw its shares fall 2 percent after the announcement, said it would buy 51.5 percent of Matrix's stock from a group of major shareholders at 306 rupees a share -- a premium of more than 10 percent to Friday's closing share price. It plans to make an open offer to acquire up to an additional 20 percent at the same price.

The deal values Matrix, which ranks about No. 7 by market value among India's top pharmaceuticals companies, at more than $1 billion and about 22 times expected earnings, compared with a Indian drugs sector average of 18.

Mylan said Matrix will expose it to important emerging markets including India, China and Africa, and give it a European footprint and distribution network through Matrix's Docpharma subsidiary.

But Bank of America analyst David Maris called the deal expensive and possibly problematic in a research note.

"It appears that Mylan is paying $736 million for a company that had approximately $23 million in free cash flow last fiscal year -- a high price in our opinion," Maris said.

Matrix manufactures active pharmaceutical ingredients and solid oral dosage forms.





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