Mayne Pharma shares dive after Australia's treasurer considers blocking Cosette bid

By Scott Murdoch

Oct 31 (Reuters) - Shares in Mayne Pharma MYX.AX plunged by nearly a third on Friday after it emerged that Australia's treasurer was considering blocking a A$672 million ($435 million) offer for the company from now-reluctant suitor, Cosette Pharmaceuticals.

Cosette bid A$7.40 per share for Adelaide-based Mayne in February but has since tried to back out of the deal, saying a weaker financial performance from Mayne had resulted in a material adverse impact that rendered their agreement void.

In mid-October, an Australian court rejected the U.S. drugmaker's request to abandon the takeover.

Mayne said in a statement it had been informed by Cosette that Australian Treasurer Jim Chalmers had indicated his "preliminary view was that the proposed acquisition would be contrary to the national interest" if Cosette proceeded with a plan to close Mayne's Adelaide manufacturing facility.

JOBS AT STAKE

Cosette had flagged the plan to close the plant in June, and local media have reported that such a move could cost 200 jobs. It is one of Mayne's two main factories - the other one based in Greenville, North Carolina.

"We'll always go into bat for Australian workers and that's what we've done," Chalmers said in a statement.

"Safeguarding Australian jobs is a central feature of the government's economic agenda and it was a central consideration in this case."

A Cosette spokesperson declined to comment to Reuters.

Shares in Mayne closed down 31.5% at A$4.25 after earlier slumping 40% to mark its lowest point since August 2024.

Mayne said in a statement the treasurer has not made a final decision and Cosette is obligated by their agreement to try its best to win his approval of the deal.

It added it had asked Cosette for a chance to communicate directly with Australia's Foreign Investment Review Board (FIRB) after Cosette moved to terminate the deal, but the request was declined.

As a result, Mayne has been unable to communicate with the FIRB, the treasurer or any other relevant government agencies regarding the approval process or matters related to the Adelaide site, it said.

Blocking the deal because Cosette had flagged it could close the Adelaide site could set a tricky precedent for Australian takeovers if a buyer wanted to exit a contentious deal, one investor said.

"This decision is detrimental for overall investment in Australia and for M&A deals in general," said Manoj Jain, co-chief investment officer of Maso Capital, a Hong Kong fund and Mayne investor.

"A far more logical conclusion for the Treasurer would be to approve the deal but with minor conditions," he said, adding that the risk premium applied to Australian deals could increase.

($1 = 1.5389 Australian dollars)