Array

MELBOURNE/NEW YORK, Sep 21 (Reuters) US drug maker Hospira Inc. has offered A$2.6 billion ($1.95 billion) for Australian generic cancer drugs group Mayne Pharma Ltd., looking to expand outside the United States.

The offer marks the latest in the fast consolidating generic drugs industry, dominated by Israel's Teva Pharmaceutical Industries Ltd. and Swiss group Novartis AG, where companies are looking to build strong pipelines of drugs to offset intense price pressure.

Mayne's board unanimously recommended the bid to shareholders.

Lake Forest, Illinois-based Hospira is offering Mayne shareholders A$4.10 for each of their shares, a 32 percent premium over Mayne's last trade.

''As an opening bid that's very significant -- and it's cash,'' said Macquarie Research analyst Marcus Wilson.

Analysts said a bidding war was unlikely at this price, which UBS said equates to around 18 times forecast earnings before interest, tax, depreciation and amortisation.

''We don't completely discount the possibility of another candidate making an offer, but it would appear difficult,'' UBS analyst Andrew Goodsall said.

Hospira expected the takeover to add to its earnings per share in 2007, assuming it closes by the end of 2006 upon shareholder, regulatory and court approvals.

Hospira's Chief Executive Christopher Begley said the purchase more than doubles Hospira's international presence and ''significantly accelerates'' the expansion of its generic injectables business.

Mayne Pharma was spun out of pathology, radiology and drugs company Mayne Group last November, seen at the time as a move that would make it a takeover target in the generic drugs market.

Mayne had tried to sell the injectible drugs business five years ago to Teva, now the world's largest generic drugs maker, for US$365 million, but Teva backed out after examining its accounts. Mayne then expanded the business, buying cancer drugs and drug distributors in Europe.

Teva bought Ivax Corp. this year for US$7.4 billion, while Novartis bought Germany's Hexal and Eon Labs of the United States for more than US$8 billion last year.

Hospira, which also makes medication-delivery systems, said last month quarterly earnings fell 25 percent as sales were nearly flat and expenses surged.

Abbott Laboratories Inc. spun off Hospira in 2004.

Morgan Stanley and law firm Baker&McKenzie advised Hospira, and Merrill Lynch&Co. and law firm Clayton Utz advised Mayne.

REUTERS DKS BST0536