Paladin Labs to buy troubled Labopharm in $20.6 million deal

Paladin Labs (TSX: PLB) has entered into a definitive agreement to acquire fellow Canadian drugmaker Labopharm (TSX: DDS) for around C$20.4 million ($20.6 million), or $0.2857 per share in cash, which represents a premium of 57.4% over the volume-weighted average price of Labopharm's shares of $0.1815 for the 30 trading days prior to this announcement.

Once high-flying Montreal-based Labopharm commanded a share price of $11, noted the local newspaper Global Mail, saying the company has now “reached the end of the road.” Early this year, Labopharm cut back its staff sharply, long-time chief executive James Howard-Tripp resigned and, in March, it began a “strategic review” that effectively put the company for sale.

For Paladin, which is also in the throes of buying Afexa Life Sciences, Labopharm brings with it substantial tax losses - about C$80-million worth in Canada – and some new international drug distribution rights to add to its portfolio, the newspaper commented. Paladin already has the rights to sell tramadol in Canada.