*Patheon says Lonza in due diligence
*Adj loss per share $0.05 vs consensus view of EPS $0.08
*Revenue down 15 pct at $164.4 million
*Shares drop 2 percent (Adds company and analyst comments. In U.S. dollars)
By Scott Anderson
TORONTO, Sept 14 (Reuters) - Executives at Canadian pharmaceuticals manufacturer Patheon Inc PTI.TO said on Monday they are continuing to discuss selling the company to Switzerland’s Lonza Group LONN.VX despite the objections of Patheon’s majority shareholder.
Lonza has sought to acquire Patheon to help sharpen its focus on the higher-margin pharmaceutical industry. It offered Patheon about $450 million, or $3.55 a share.
That offer was rejected by Patheon’s chief shareholder, U.S.-private equity company JLL Partners, which owns 57 percent of the company, even though a special committee of Patheon investors has said it wants to keep the door open to a Lonza deal.
“They are (in due diligence) and we are supporting the process,” a Patheon official said on a conference call with analysts, held to discuss the company’s quarterly results.
Patheon did not provide further comment.
JLL has said the financial environment is not right to sell Patheon, which has struggled as its customers, key pharmaceutical companies, cut costs to shore up balance sheets.
“What Lonza is doing is independent of what JLL is going to do. One does not mean the other has changed,” said Maher Yaghi, an analyst at Desjardins Securities, in Montreal.
“JLL has come out clearly and said they are not going to let this go.”
Earlier on Monday, Patheon said it lost $6 million, or 11 cents a share, in its third quarter ended July 31, compared with a loss of $14 million, or 15 cents a share for the same time last year.
The 2008 results included a number of restructuring costs related to the downsizing of some of its operations.
Last year the company said it planned to sell some Ontario production facilities and transfer operations to other sites as it moved away from making over-the-counter treatments for drug companies to more lucrative prescription drug manufacturing.
Adjusted for a higher-than normal tax rate, Desjardins’ Yaghi said the company would have reported a loss of 5 cents a share.
Revenue for the quarter was $164.4 million, down 15 percent from $195 million for the same period last year, due to production problems at its Puerto Rican operations, foreign currency fluctuations, and a slowdown of research and development in the pharmaceutical industry.
Analysts were expecting, on average, earnings per share of 8 cents after items, and revenue of $182.1 million, according to Reuters Estimates.
The company’s shares, which jumped to as high as C$3.63 following the Lonza bid, were down 2 percent at C$2.93 on the Toronto Stock Exchange on Monday.
“Everybody has been getting accustomed to the company’s volatile revenues and earnings, probably that’s why you don’t see much reaction on the stock price,” Yaghi said.