Afexa Life Sciences Inc., the company that makes and sells Cold-FX, is lining up potential suitors as it seeks an alternative to a $50-million hostile takeover bid from Paladin Labs Inc.
Paladin is offering Afexa shareholders 55 cents per share -- a 16 per cent premium to the share price before the bid was announced -- but the company late Tuesday said again that shareholders should not tender.
In an interview Wednesday, Afexa chairman William White said that the company has lots of interest from companies interested in a rival transaction.
"We're trying to identify the best candidates to work with," Mr. White said. "Frankly, we've been solicited by people already and we've initiated contact with a number of others who have expressed an interest. We think there could be an alternative transaction that comes to the fore that could be much better."
A special committee of Afexa's board has hired Scotia Capital to help find an alternative.
Paladin has two potential advantages. One is time, as the window to find a white knight under Canadian corporate law is short. The other is a 15 per cent stake in Afexa that it picked up in the open market, giving it a leg up on other potential bidders.
So what is Afexa worth? Mr. White won't put a number on it, but it's more than 55 cents a share, he argues.
Mr. White said that at the moment, the bid doesn't reflect the growth potential in Cold-FX, which the company is planning to introduce in the U.S. and Japan, or the new products that the company is developing, including a cold-sore fighting product.
"The value we're seeing in this offer doesn't even reflect the value of the lead product, Cold-FX, much less the additions that are coming to market in short order," Mr. White said.