Valeant to acquire Afexa for C$76 million in cash

Aug 31 2011

Valeant Pharmaceuticals International, Inc. ("Valeant") (NYSE/TSX:VRX), announced today that it has agreed to acquire Afexa Life Sciences Inc. (TSX:FXA) for approximately C$76 million. Afexa, a health-science company headquartered in Edmonton, Alberta, Canada, currently markets several consumer brands, such as COLD-FX® and COLDSORE-FX(TM), and has annual revenues of approximately C$40 million.

"We are pleased to have the full support of Afexa's management team and board of directors for a transaction that we believe should deliver significant benefits to our customers, employees and shareholders," stated J. Michael Pearson, chairman and chief executive officer. "Afexa's strong franchise of consumer brands, including COLD-FX®, Canada's leading over the counter (OTC) cold and flu treatment, will be a solid addition to our developing OTC product portfolio in Canada. Afexa's product line, combined with our portfolio from VitalScience, including dermaglow®, and our recent Canadian launch of CeraVe, will provide the critical mass we need in the OTC market and should provide Valeant Canada with another platform for growth."

Under the terms of the agreement, holders of Afexa Common Shares will receive C$0.71 in cash per Common Share, which represents a premium of approximately 30% to Afexa's 30-trading day volume weighted average closing price on the Toronto Stock Exchange (TSX) and a premium of 49% over the closing price the day before the announcement of the unsolicited bid of Paladin Labs Inc. The agreement also represents a premium of 29% to the cash consideration and a 49% premium to the alternative share consideration offered under Paladin Labs Inc. unsolicited bid (based on Paladin's closing share price on the TSX on August 29, 2011).

The board of directors of Afexa, after receiving the unanimous recommendation of the special committee of the board of directors, has approved the agreement and unanimously recommends that Afexa's shareholders tender their Common Shares. The Afexa board of directors has received a fairness opinion from its financial advisor stating that the consideration to be received is fair from a financial point of view to the shareholders of Afexa. In addition, Valeant has entered into lock-up agreements with directors and officers of Afexa pursuant to which such directors and officers have agreed to tender all Common Shares held by them, representing in the aggregate 8.8% of the outstanding Common Shares on a fully-diluted basis.

Full details of the offer will be included in a take-over bid circular which is expected to be mailed to holders of Common Shares by September 9, 2011. The offer will be open for acceptance for a period of not less than 35 days and is subject to a number of customary conditions, including there being deposited under the offer and not withdrawn at the expiration of the offer such number of Common Shares that represent at least 66-2/3% of the outstanding Common Shares calculated on a fully-diluted basis, there being no material adverse changes to Afexa's business and the receipt of all necessary regulatory approvals. Pursuant to the agreement, Afexa has agreed to waive the application of the shareholder rights plans to the offer and to take no action to waive the application of the shareholder rights plans to any other acquisition proposal.