Shares in Mayne Pharma Group have entered a trading halt this morning after BusinessDay reported that it was expected to tap investors for a capital raising as early as today to fund the acquisition of a US healthcare company.
Mayne this morning requested its shares be halted, pending the release of an announcement by Monday, 8 October. Sources with knowledge of the transaction said Mayne’s capital raising and debt issue will be used to pay for the purchase of the US-based pharma development company Metrics Inc.
At $100 million, the purchase price would be almost double Mayne’s market capitalisation of $55 million.
The capital raising is expected to be priced at 20¢ a share, a steep discount to its last traded price of 36¢. The raising will be led by brokerages UBS and Credit Suisse and supported by Paterson.
Mayne’s shares are down 8 per cent so far this calendar year, coming under pressure since Mylan Pharmaceuticals of the US launched legal action citing competition concerns. The battle is over Mylan’s generic version of Warner’s prescription antibiotic Doryx, made by Mayne and used to treat infections, control acne and prevent malaria.
Mayne Pharma is chaired by Fairfax Media chairman Roger Corbett. Its largest shareholder is gaming entrepreneur Bruce Mathieson.
Mayne declined to comment last night. It told the ASX last month that it was ‘‘reviewing a number of strategic options to grow the business and is considering a capital raising as part of this strategy, which is preliminary, uncertain and incomplete.’’
Mayne develops and manufacturers proprietary and generic products that it distributes directly and through distribution partners. It also provides contract manufacturing services. Australia, the US and Korea comprise 92 per cent of its sales.
Profit jumped to $6.15 million in the 2012 financial year, from $1.68 million the previous year.