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Paladin Labs to buy 45% stake in South Africa's Litha

Elena Elisseeva/iStockphoto

Paladin Labs Inc. said it plans to buy a near 45-per-cent stake in South Africa's Litha Healthcare Group Ltd. in a complex deal to expand its footprint in the region.

The deal will see Paladin speed up its buyout of the near 55 per cent of Pharmaplan it does not currently own. It will then sell the business to Litha in a cash-and-stock deal.

Pharmaplan provides marketing and sales services for small to mid-sized drug makers in South Africa and other sub-Saharan territories.

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Litha will issue 169.1 million shares at 2.75 rand (36 cents) apiece to buy Pharmaplan, but Paladin did not specify the cash part of the deal. Paladin also agreed to buy an additional 73 million Litha shares from Blackstar Group at the same price.

Montreal-based Paladin said it expects to spend $48-million (Canadian) in cash and issue 88,948 shares at $44.97 each to complete the combined transactions, which will make it Litha's single largest shareholder.

The deal is expected to be accretive to Paladin's earnings before interest, taxes, depreciation, and amortization (EBITDA) immediately upon closing, the Canadian company said in a statement.

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