Treasurer Jim Chalmers has blocked a $672 million takeover bid for Aussie drug manufacturer Mayne Pharma from US-based Cosette Pharmaceuticals on national interest grounds.
In a statement on Friday, Dr Chalmers accepted Foreign Investment Review Board (FIRB) advice and put a stop to the deal, despite the Takeovers Panel ruling in favour of the deal with conditions.
The treasurer said the FIRB gave “consideration to all available options, including whether any conditions could be applied to adequately mitigate national interest risks, particularly unique risks to the supply of critical medicines”.
Mayne’s manufacturing plant in the north Adelaide suburb Salisbury has played a central role in the cancellation. Cosette had threatened to close the plant, claiming concerns over its future viability.
Mayne has spent millions on Salisbury since 2016 as part of its rollout into the US market, where it sells 71 US Food and Drug Administration-approved products, including popular acne treatment Doryx.
The Australian Financial Review has reported Treasury’s decision could deprive Mayne Pharma shareholders of as much as $250 million. Mayne’s shares have lost 37 per cent of their value since May when Cosette first signalled it would seek to exit the deal.
A federal Takeovers Panel ruling in favour of the acquisition released on Wednesday argued Treasury could require Cosette to keep the Salisbury plant open, a position Mr Chalmers has now rejected.
“Unequivocal advice from Treasury and FIRB [said] no conditions could be put in place to adequately mitigate national interest risks, particularly unique risks to the supply of critical medicines,” Dr Chalmers said on Friday.
Lawyers and shareholders have previously accused the treasurer of being played by Cosette, which they alleged was exploiting the FIRB process to escape their initial $7.40 a share bid.
US President Donald Trump in April ordered a review of import tariffs, including those covering pharmaceuticals, and in September threatened a 100 per cent increase, though rises have not followed.
Cosette originally framed the deal as a strategic expansion of its women’s and dermatological drug portfolios, but by May had launched a legal challenge alleging Mayne had concealed vital information and was in financial decline.
Mayne has said it believes there are no credible reasons to close its Salisbury plant.
Commenting on the decision in a statement to the ASX on Friday afternoon, Mayne said Cosette had requested discussions, but failure to negotiate an alternative solution within ten business days would scrap the takeover deal under its current terms.
“Mayne Pharma is currently assessing its options and next steps,” the statement said.
Lawyers have previously warned Treasury’s decision to block the takeover could see FIRB exploited in future by international firms seeking to exit Australian investments.
Mr Chalmers launched a consultation paper last month calling for input on future changes to FIRB laws, including possible automatic approvals for low-risk international investors.
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