Mayne Pharma has strongly criticized claims made by Cosette, the American healthcare company pursuing a takeover of the Australian firm, regarding the potential closure of its Adelaide factory. The Australian company argues that there is no credible basis for Cosette’s suggestion that it would shut down the Salisbury plant, a key facility that employs 200 people and plays a significant role in the country’s pharmaceutical manufacturing landscape.
Cosette, which is backed by private equity, initially offered $672 million for Mayne Pharma but is now attempting to withdraw from the deal. The company alleges it was misled about Mayne’s financial condition, leading to its current legal disputes. South Australian Premier Peter Malinauskas has expressed support for Cosette, indicating concerns about the factory’s future should the acquisition proceed. He cited possible financial instability and the threat of tariffs from US President Donald Trump, which could impact pharmaceutical exports from Australia.
Mayne Pharma Defends Factory’s Strategic Importance
In response to the closure claims, a spokesperson for Mayne emphasized the factory’s strategic importance, stating it is backed by recent investments and strong financial performance. The facility underwent an $18 million upgrade, supported by a $4.8 million federal government grant, to enhance its packing and bottling capabilities. The spokesperson added, “There is simply no credible reason why any responsible owner would seek to close such a high-performing facility.”
The potential closure of the Salisbury plant has raised political concerns, given its significance in South Australia and the broader national context. The factory’s closure would likely face public backlash as it contributes to the local economy and the pharmaceutical sector. The final decision regarding the takeover lies with Treasurer Jim Chalmers, who is expected to consider recommendations from the Foreign Investment Review Board (FIRB).
Impact on Mayne Pharma’s Market Value
The ongoing negotiations and the politicization of the takeover have resulted in a 15 percent decline in Mayne Pharma’s share price this week. Investors reacted negatively to Malinauskas’ intervention, interpreting it as an indication that the deal may face hurdles. On Thursday, Mayne’s shares rose by 0.7 percent, settling at $4.53, significantly lower than Cosette’s offer of $7.40 per share.
Mayne Pharma asserts that the Adelaide plant has a carrying value of $70.5 million and that the products manufactured at the Salisbury site are not significantly exposed to the US market. The company reported a 7 percent revenue increase for its Australian operations last financial year, further underscoring the factory’s viability.
Cosette’s legal claims include allegations that Mayne withheld crucial information that resulted in an earnings downgrade earlier in the year. As part of the ongoing legal proceedings, Cosette is seeking to make confidential financial modeling by Mayne’s adviser, Jefferies, public.
The situation remains fluid, with significant implications for both companies involved and the broader pharmaceutical manufacturing sector in Australia as the outcome of the takeover unfolds.
