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TheStreet Open House

Patheon Inc. To Be Taken Private For US$9.32 Per Share In Cash

Independent Committee Unanimously Recommends Transaction

TORONTO, Nov. 19, 2013 /PRNewswire/ - Patheon Inc. (TSX:PTI) ("Patheon") today announced that it has entered into an arrangement agreement (the "Arrangement Agreement") with JLL/Delta Patheon Holdings, L.P., a limited partnership ("Newco") under which Patheon would be taken private pursuant to a court-approved plan of arrangement (the "Arrangement") under the Canada Business Corporations Act. Newco is sponsored by an entity controlled by JLL Partners, Inc. ("JLL") and Koninklijke DSM N.V. ("DSM"). Affiliates of JLL currently own 55.7% of the restricted voting shares of Patheon and all of the outstanding class I preferred shares, series D of Patheon (the "Preferred Shares").

The Arrangement Agreement contemplates that Newco will acquire, directly or indirectly, all of the restricted voting shares of Patheon (the "Restricted Voting Shares"), including those held by affiliates of JLL, for cash consideration of US$9.32 per share (the "Cash Consideration").  In addition, all of the Preferred Shares will be purchased for nominal consideration and cancelled.  The Cash Consideration will be paid in US dollars at closing, and is equivalent to approximately C$9.72 per share (based on the daily noon exchange rate of the Bank of Canada on November 18, 2013).  This represents a 64% premium to the closing price of the Restricted Voting Shares on November 18, 2013, a premium of 73% to the volume weighted average trading price of the Restricted Voting Shares on the TSX over the past 20 trading days, and a premium of 43% to the 52-week high (of C$6.80) of the Restricted Voting Shares on the TSX. The transaction provides total consideration to shareholders other than JLL affiliates of approximately US$582 million and implies an equity value for Patheon of approximately US$1.4 billion.

As part of the transaction, the limited partners of the JLL-affiliated investment fund that indirectly owns 55.7% of the Restricted Voting Shares will also receive the same Cash Consideration per Restricted Voting Share as is provided to the minority shareholders of Patheon.  The transaction will result in Cash Consideration to all JLL affiliates of approximately US$732 million.  As part of the transaction, the general and limited partners of such investment fund will make indirect investments in Newco of approximately US$60 million and US$50 million, in aggregate, respectively.

On the closing of the transaction, the business of Patheon and DSM's existing pharmaceutical products business will be combined to create a global leader in contract development and manufacturing services.  The combined entity will be a company with anticipated 2014 annual sales of approximately US$2 billion (pro forma). Following completion of the transaction, Patheon's Restricted Voting Shares will be de-listed from the TSX and no longer traded publicly.

The transaction has been approved unanimously by the Board of Directors of Patheon (with interested directors abstaining) following the report and unanimous favourable recommendation of a special committee of independent directors (the "Independent Committee").  In so doing, both the Independent Committee and the Board of Directors of Patheon determined that the Arrangement is fair to holders of Restricted Voting Shares (other than affiliates of JLL and certain members of Patheon management) (the "Minority Shares") and is in the best interests of Patheon.  Both the Independent Committee and the Board of Directors recommend that minority shareholders vote in favour of the arrangement resolution at the special meeting of holders of Restricted Voting Shares to be held to approve the transaction (the "Special Meeting").

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