Battle for Afexa escalates as suitors Valeant and Paladin up offers; Dr Reddy's and JBCPL scrap Russian deal

The fight for the acquisition of Canada’s Afexa Life Sciences (TSX: FXA) has gone into overdrive, with Valeant Pharmaceuticals International (NYSE/TSX: VRX) announcing yesterday that it intends to raise its takeover offer for the Edmonton, Alberta-based company to C$0.85 per common share, an increase of 20% from C$0.71 originally offered under an agreement announced last month, which valued the company at around C$76 million ($78 million: The Pharma Letter August 31).

The increased offer is subject to Afexa's agreement to certain amendments to the support agreement, including a reduction in the minimum tender condition, which Valeant hopes to resolve in the coming days and aims to stop the company falling into the hands of fellow Canada-based Paladin Labs (TSX: PLB), which is also in the process of buying Labopharm (TSX: DDS; TPL August 22).

"We have decided to offer a premium to Paladin Labs' most recent proposal as we are able to attribute more value than Paladin to the Afexa business given both our larger scale and resources in Canada, coupled with our extensive international consumer footprint," stated Michael Pearson, chairman and chief executive officer. "While we normally don't participate in an auction process, given that our existing offer has the full support of the Board and Management of Afexa, we felt it was appropriate to continue to respond quickly to Paladin's hostile overtures."