The Australian Government has blocked a A$672m ($435m) takeover of Mayne Pharma by US-based Cosette Pharmaceuticals.
The decision comes after Cosette became a hesitant bidder and threatened to close one of the local manufacturing sites, reported Reuters.
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The decision by Treasurer Jim Chalmers is said to align with the Foreign Investment Review Board’s (FIRB) advice that the acquisition would not be in the country’s national interest.
Mayne Pharma said in a statement that the takeover was “unlikely to proceed” as FIRB approval, a requirement under the agreement with Cosette, had not been granted.
“Mayne Pharma is currently assessing its options and next steps,” the company said.
The majority of Mayne shareholders backed the takeover in a vote held in June.
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By GlobalDataReuters said Cosette did not respond to a request for comment.
In February, the US drugmaker is said to have made an offer of A$7.40 per share for Mayne but later attempted to withdraw, citing “weaker financial performance” from Mayne that amounted to a material adverse event and voided the agreement.
Cosette also warned it would close Mayne’s Adelaide manufacturing plant, which employs around 200 individuals, if the transaction went ahead, the news agency said.
Mayne operates two main manufacturing facilities: one in Adelaide, Australia, and another in Greenville, US.
The company produces both branded and generic medicines, with a focus on women’s health, infectious diseases and dermatology.
The proposal faced opposition in September from South Australian Premier Peter Malinauskas, who called for FIRB to block Cosette’s bid.
Reuters added that, in October, an Australian court dismissed Cosette’s request to abandon the takeover.
Mayne shareholder and Maso Capital co-founder Manoj Jain is said to have criticised the decision, noting that it set a poor precedent if foreign buyers could withdraw easily from agreed deals, and suggested the equity risk premium for investing in Australia had increased.
The move came shortly after the Takeovers Panel ruled that Cosette must comply with any reasonable conditions set by Chalmers regarding the Adelaide facility.
Chalmers said that advice from the Treasury and FIRB indicated there were no conditions that could sufficiently address the “unique risks” to essential medicines supply.
