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Jubilant to acquire Draxis Health of Canada
Our Bureau, Bangalore | Monday, April 7, 2008, 08:00 Hrs  [IST]

Jubilant Organosys Ltd and Draxis Health Inc. have entered into an arrangement agreement whereby a wholly-owned subsidiary of Jubilant Organosys Ltd will acquire all the outstanding common shares of Draxis at a price of US $6.00 per share in cash by way of a plan of arrangement. The total value of this transaction is approximately US $255 mn.

The purchase price represents a 22.4 per cent premium over yesterday's closing price of Draxis's shares on Nasdaq and a 41.2 per cent premium over the closing price of Draxis's common shares on Nasdaq on March 13, 2008, the last trading day on Nasdaq prior to the request by securities regulators to explain increased trading in Draxis's common stock on March 14, 2008.

The transaction was unanimously approved by the board of directors of Draxis on April 04, 2008 following receipt of the recommendation of its special committee. Draxis's board has resolved to recommend to its shareholders that they vote in favour of the transaction on the basis that it creates immediate value for Draxis shareholders. As well, the board expects the transaction to provide operational and technical resources to accelerate the growth of Draxis's business and its customer base.

Commenting on the acquisition, Shyam S Bhartia, chairman and managing director and Hari S Bhartia, co-chairman and managing director of Jubilant Organosys Ltd. said, "Draxis represents a unique opportunity in the North American market, offering Jubilant entry into the attractive, regulated, high growth and high margin radiopharmaceutical business. It also enables Jubilant to consolidate its position in the sterile and non-sterile contract manufacturing business. With this acquisition Jubilant will become one of the leading providers of contract manufacturing of small volume parenterals to large pharmaceuticals and biotech companies in North America. Draxis has an excellent regulatory track record, with its management and employees having a wealth of experience and expertise in radiopharmaceuticals and contract manufacturing. Jubilant is committed to grow Draxis by supporting management and employees through new product launches, entry into new markets and expansion of customer base".


The transaction will be carried out by way of a statutory plan of arrangement pursuant to the Canada Business Corporations Act and must be approved by the Québec Superior Court and the affirmative vote of Draxis's shareholders at a special meeting of shareholders. The proposed transaction is expected to close in the second quarter of 2008, shortly after receipt of shareholder and court approvals.

The arrangement agreement contains customary non-solicitation provisions, but permits Draxis, in certain circumstances, to terminate the arrangement and accept an unsolicited superior proposal, subject to fulfilling certain conditions. Draxis has agreed to pay Jubilant a break fee of $10.5 million in such circumstances and certain other limited circumstances if the transaction is not completed.

Jubilant plans to fund the acquisition through a combination of cash-on-hand and debt. The transaction is not contingent on any financing condition.

Further information regarding the transaction will be contained in a proxy circular that Draxis will prepare and mail to holders of common shares in connection with the special meeting of shareholders to be held to approve the transaction. It is expected that these materials will be mailed in April 2008 for a meeting to be held in May 2008. Once mailed, the proxy circular will be available at www.sedar.com and www.sec.gov. All shareholders are urged to read the proxy circular once it is available.

Draxis Health, through its wholly owned operating subsidiary, Draxis Specialty Pharmaceuticals Inc., provides products in three categories: sterile products, non-sterile products and radiopharmaceuticals.

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