JLL Formalizes Patheon Buyout Offer

JLL Partners has submitted a formal offer to buy Patheon Inc. (TSX: PTI) for $2 per share. The move comes less than a month after Patheon said that such an offer “significantly undervalues” the company. JLL already holds a 30% stake in Patheon, which provides contract development and manufacturing services to the global pharmaceutical industry. 

PRESS RELEASE

JLL Patheon Holdings, LLC, an affiliate of JLL Partners, Inc. (“JLL”), announced today that it will be commencing its previously announced offer for any and all of the issued and outstanding Restricted Voting Shares of Patheon Inc. (“Patheon”) that it does not already own at an offer price payable in cash of U.S. $2.00 per Restricted Voting Share, which is equivalent to approximately C $2.57 cash per Restricted Voting Share based on the current exchange rate.

The offer is scheduled to expire at 6:00 p.m., Toronto time, on April 16, 2009, unless the offer is extended or withdrawn by JLL.

The closing price of the Restricted Voting Shares on the Toronto Stock Exchange (the “TSX”) on December 5, 2008, the last trading day prior to the announcement of JLL’s intention to make the offer, was C $1.07, or approximately U.S. $0.84. The offer price represents a premium of approximately 138% over the U.S. dollar equivalent of this closing price. The offer price also represents a premium of approximately 161% over the C $0.97, or approximately U.S. $0.77, volume-weighted average closing price of the Restricted Voting Shares on the TSX during the twenty trading days up to and including December 5, 2008.

The closing price of the Restricted Voting Shares on the TSX on March 10, 2009, the last trading day prior to the commencement of the offer today, was C $2.13, or approximately U.S. $1.66. The offer price represents a premium of approximately 21% over the U.S. dollar equivalent of this closing price based on the current exchange rate.

JLL believes that the offer represents a liquidity event at an attractive premium for holders of thinly-traded securities. Moreover, the offer consideration is composed entirely of cash. The offer is fully financed by JLL and will not require Patheon to incur any incremental debt to complete the purchase of any and all of Patheon’s outstanding Restricted Voting Shares.

The offer is subject to customary conditions, including the absence of a material adverse change at Patheon and the receipt of regulatory approvals. The offer is not subject to any minimum deposit condition.

The holdings of JLL, together with its affiliates, associates, and persons acting jointly or in concert with JLL within the meaning of the Canada Business Corporations Act currently amount to approximately 40% of the issued and outstanding Restricted Voting Shares of Patheon on an as-converted basis.

If sufficient Restricted Voting Shares are deposited in the offer, JLL intends, to the extent possible, to take the appropriate steps by way of a compulsory acquisition or subsequent acquisition transaction under Canadian law to acquire the remaining outstanding Restricted Voting Shares of Patheon. JLL’s ability to complete a compulsory acquisition or subsequent acquisition transaction is dependent upon a number of factors that are beyond JLL’s control. Accordingly, there can be no assurance that any such transaction will be completed, and shareholders wishing to sell their shares at the offer price are encouraged to deposit them in the offer.

JLL Patheon Holdings, LLC today also entered into a voting agreement (“Voting Agreement”) with Joaquin Viso, Olga Lizardi, Jose A. Negroni, Lorraine Hernandez and Aida Garcia (collectively, the “Viso Shareholders”) who hold, in aggregate, 12,581,766 Restricted Voting Shares. The primary purpose of the Voting Agreement is to secure JLL’s and the Viso Shareholders’ agreement to vote the Restricted Voting Shares beneficially owned by them in favour of certain resolutions unrelated to the offer and setting out the proposed terms of a stockholders agreement to be entered into by the parties in certain circumstances should the offer be successful. Under applicable securities laws, during the term of the Voting Agreement the Viso Shareholders are considered to be acting jointly or in concert with JLL.

About JLL Partners

JLL Partners, Inc. is a New York-based leading private equity investment firm with approximately $4.0 billion of capital under management. JLL’s investment philosophy is to partner with outstanding management teams and invest with them in companies that they can continue to grow into market leaders. JLL has invested in a variety of industries, with special focus on financial services, building products, and healthcare services and medical products. More information on JLL can be found on the website www.jllpartners.com.

About Patheon

Patheon Inc. is a leading provider of contract development and manufacturing services to the global pharmaceutical industry. Patheon provides products and services to more than three hundred of the world’s leading pharmaceutical and biotechnology companies. Patheon’s services range from pre-clinical development to manufacturing of a full array of dosage forms. Patheon’s global network of ten manufacturing facilities and six development centers ensures that customer products can be launched with confidence anywhere in the world. More information on Patheon can be found on the website www.patheon.com.