A Medical Device Daily

Jubilant Organosys (Noida, India) reported that it will acquire Draxis Health (Mississauga, Ontario) at a price of $6 per share in cash by way of a plan of arrangement. The total value of the transaction is about $255 million.

Last month, Draxis, a supplier of radiopharmaceuticals, reported that it was in discussions to be acquired after securities regulators asked the company to explain increased trading in its common stock (Medical Device Daily, March 18, 2008).

The purchase price represents a 22.4% premium over last Thursday's closing price of Draxis shares on Nasdaq and a 41.2% premium over the closing price of its common shares on Nasdaq on March 13, the last trading day before the regulators' request.

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

The transaction was unanimously approved by the board of Draxis on Friday following receipt of the recommendation of its special committee. The board recommends that its shareholders vote in favor of the transaction on the basis that it creates immediate value for Draxix shareholders. The board said it also 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 Bhartia, chairman and managing director, and Hari Bhartia, co-chairman and managing director of Jubilant said Draxis offers "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.

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

The transaction is expected to close in 2Q08, shortly after receipt of shareholder and court approvals.

Banc of America Securities Canada has acted as financial advisor to Draxis and McCarthy Tetrault is legal counsel to the company. Lazard has acted as financial advisor to Jubilant and Osler Hoskin & Harcourt is acting as legal counsel to Jubilant.

Jubilant is one of the largest custom research and manufacturing services (CRAMS) and drug discovery and development services companies out of India. The company has a presence across the pharmaceutical value chain for products and services such as exclusive synthesis, contract manufacturing, proprietary products, active pharmaceutical ingredients, generic dosage forms, drug discovery services, drug development services, chemistry services, clinical research services.

Emeritus (Seattle), a national provider of assisted living and related services to senior citizens, reported that it has closed on its previously disclosed transaction to acquire 24 assisted-living communities for a purchase price of $305 million, excluding closing costs.

The company financed this transaction through mortgage debt of about $241.9 million originated by Capmark Finance, through a Fannie Mae Credit Facility with an interest rate of 5.9%, and seller provided debt of $30 million with an interest rate of 7.25%. In addition, the seller agreed to a 12-month extension on an existing $21.4 million note originally maturing in March 2008.

The company said it expects to incur a one-time charge of about $9 million for prepayment penalties on the previous financing structure.

This portfolio includes a related memory loss community that was financed separately with variable debt financing of $8 million originated by Capmark Finance.

As part of the terms of the transaction, the company also secured the ability to borrow up to an additional $11 million based on portfolio performance.

This transaction will increase the company's portfolio of owned properties to 131, or 51.2% of the total consolidated portfolio.