Mayne Nickless bids $1bn for Faulding

Health care and health services represent a growing market in the Asia-Pacific region

In this story: Shareholders advised to wait Business would be sold RELATED SITES

By CNN's Geoff Hiscock, Asia business editor

SYDNEY, Australia (CNN) -- Australian health care and logistics group Mayne Nickless launched a $1 billion (Aust $2 billion) takeover bid Thursday for pharmaceutical group F.H. Faulding.

A successful bid would strengthen Mayne's position in the growing market for health care and hospital services in Australia and the Asia-Pacific region.

Mayne's annual revenue of $1.7 billion is now split almost 50-50 between the core businesses of health care and logistics, but buying Faulding would see health care take even greater priority in the business strategy of a company that started life as a parcel delivery firm.

The two-tier share offer represents a 15 percent premium to Faulding's share price.

Mayne is offering a minimum A$11.50 and a maximum A$12.17, depending on how much is raised from the proposed sale of Faulding's oral pharmaceuticals business.

Mayne chief executive officer Peter Smedley said the bid was a significant premium and unlocked value in Faulding that "would not otherwise be realised in the foreseeable future."

Shareholders advised to wait

Faulding advised shareholders to wait until there was a formal recommendation from its directors.

Faulding shares closed on the Australian Stock Exchange at A$12.25, up A$2.01 or a 19.6 per cent jump. Mayne shares were down 14c at A$6.03, a loss of 2.1 percent.

Mayne, which in February reported a net profit of about $62 million (A$118.5 million) for the half year to December 2000, is Australia's biggest service company in health care and logistics.

Faulding, based in Adelaide, South Australia, makes hospital injectables for export to about 70 countries, and provides management and distribution services for pharmacies and hospitals. It also runs a U.S.-focused oral pharmaceuticals business.

Business would be sold

This is the division that Mayne wants to sell.

It said the division's lack of scale, imminent capital needs and U.S. focus meant it was worth more to a company that could extract "in-market synergies" across sales, manufacturing and distribution.

"We are confident that there will be strong buyer interest in the Oral Pharmaceuticals business," Smedley said.

He said the base offer was a minimum of 1.864 Mayne shares for each Faulding share.

This will increase to 1.972 Mayne shares if the oral pharmaceuticals business is sold for more than $550 million after tax, with an extra 0.018 Mayne shares for every $10 million in sale proceeds above the base $550 million.

Mayne, which has assets of about $1.5 billion and annual revenue of about $1.7 billion, operates in Australia, Canada, China, Fiji, Indonesia, Malaysia and Thailand.

Revenue from its health care business for the half year to December 2000 was $361 million, while that for its logistics business was $330 million.

Mayne Nickless
F.H. Faulding

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