Toronto-based generic drugs maker's shares jump on friendly takeover deal worth $255 million U.S.

Jubilant Organosys Ltd., an India-based integrated pharmaceuticals industry firm, is growing in North America by bidding to acquire Canadian drug producer Draxis Health Inc. for $255 million (U.S.).

Jubilant is offering $6 per share for Toronto-based Draxis in a friendly takeover announced yesterday. Draxis, with 500 employees, has its manufacturing operations in Montreal.

"They have been doing some acquisitions over the past couple of years in this area," said Jerry Ormiston, executive director of investor relations for Draxis.

Last year, Jubilant bought Spokane, Wash.-based Hollister-Stier Laboratories, a contract manufacturer of sterile injectible vials, for $122.5 million, Ormiston said.

"Jubilant has expressed an interest in moving into the North American market in a greater way and to grow their business."

Jubilant, listed on the Mumbai stock market, is one of India's largest custom drug research and manufacturing companies. In addition to several locations in India, it has two in the United States – in Maryland as well as in Washington state.

Ormiston said he wasn't sure whether Draxis would be absorbed into Jubilant's operations or be a separate subsidiary.

The deal is the second takeover of a well-known Canadian company by an Indian firm, as corporations in the fast-growing economy look beyond Asia for growth. Last year, Algoma Steel was bought by India's Essar Steel for $1.85 billion. Indian companies have also been said to be examining investment in the Alberta oil sands.

The proposed acquisition of Draxis represents a 22.4 per cent premium over Thursday's closing price for the company, which has a generic version of Cardiolite, a commonly used drug for nuclear medicine imaging.

Draxis had acknowledged last month that it was in talks with a potential buyer.

Draxis shares rose more than 20 per cent yesterday on the TSX, a level suggesting that the market does not expect a higher offer.

Source: The Star