MAYNE Pharma has set its sights on the world's largest drug market, via the ''transformational'' purchase of a US-based pharmaceutical development company.
The group has confirmed its planned purchase of the privately held Metrics Inc for up to $US120 million ($A117 million) - $US105 million upfront and up to $US15 million in earn-out payments.
The purchase, flagged in BusinessDay, is more than double Mayne's market capitalisation of $55 million. It will be funded by a $US44.5 million debt facility and a $65 million equity raising conducted by UBS and Credit Suisse.
The equity raising is priced at 20¢ a share, a steep discount to Mayne's last traded price of 36¢, and will be supported by Mayne's key shareholders, chairman Roger Corbett and pokies entrepreneur Bruce Mathieson.
Mayne recently reported a profit jump to $6.15 million in the 2012 financial year, from $1.68 million the previous year. It expects the merged company's profit to reach between $8.1 million and $9.8 million in FY13.
The enlarged company will also have $102 million in sales, comprising 31 per cent generic products, 34 per cent contract services and 35 per cent branded products.
''The combined business will have 14 marketed products plus 17 new products in various stages of development,'' Mayne told shareholders yesterday.
Mayne's shares are down 8 per cent so far this calendar year, coming under pressure over an anti-trust lawsuit filed by Mylan Pharmaceuticals of the US. 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 develops and manufacturers proprietary and generic products that it distributes directly and through distribution partners.