Takeover bid as Patheon returns to profit in Q4
US-based JLL, which is Patheon’s largest shareholder with a 29 per cent holding of restricted voting shares, has offered C$320m to buy up the remaining restricted shares in a move that would effectively give it control of the company.
The bid comes as Patheon has just started to emerge from a difficult period that has seen its share price decline from well over $4 at the start of the year to under a dollar last week.
The company’s fourth-quarter figures mark a continued recovery for Patheon, which saw its performance held back through 2006 and 2007 in part as a result of its purchase of Puerto Rican operation Mova Pharmaceuticals in 2004.
A restructuring plan put in place a year ago when CEO Wes Wheeler took the helm, has resulted in a top-to-bottom revamp that has seen Patheon relocate its corporate headquarters from Toronto to Research Triangle Park in North Carolina, US, sell off, refocus and downsize facilities and sign a series of deals to broaden its portfolio of services.
That recovery was once again reflected in its financial results. In the fourth quarter the company reported revenues up 6.4 per cent to $172m and reversed a net loss a year to ago to post net income of $36.9m. One of the reasons for the return to the black was a $34.9m one-time gain after JLL waived rights to debt in return for equity in Patheon.
Critically, for the first time Patheon’s Puerto Rican operations posted a small profit, helped by the shuttering of the loss-making Carolina facility after Patheon failed to find a buyer for the plant.
Looking ahead to next year, Patheon said it expects revenues to decline slightly in the first fiscal quarter year-on-year due to strengthening of the US dollar. Earnings are predicted to be comparable with the first quarter of 2008,
“We start 2009 as a new beginning for Patheon, with a solid balance sheet and a strong platform for future growth,” said Wheeler.
Updating on the JLL bid, Patheon said it has appointed a committee of independent directors to review and evaluate the unsolicited bid from JLL, and make recommendations on how to proceed in due course.
