Risks Loom if Mayne Pharma’s Cosette Scheme Fails: Share Price Could Slide

Background and Proposal

Mayne Pharma Group Limited (ASX: MYX), a specialty pharmaceutical company focused on women’s health and dermatology, has entered into a Scheme Implementation Deed with Cosette Pharmaceuticals, Inc. The proposed transaction involves Cosette acquiring all Mayne Pharma shares via a scheme of arrangement for $7.40 cash per share.

This price represents a significant premium, approximately 37%, over Mayne Pharma’s last undisturbed closing price of $5.41 on February 20, 2025, and an even higher premium relative to 30-, 90-, and 180-day volume-weighted average prices. The scheme consideration sits comfortably within the valuation range of $6.61 to $7.99 per share assessed by Deloitte Corporate Finance, the Independent Expert appointed to evaluate the transaction.

Board and Expert Endorsement

The Mayne Pharma Board has unanimously recommended that shareholders vote in favor of the scheme, subject to no superior proposal emerging and the Independent Expert maintaining its positive conclusion. The board’s recommendation reflects a thorough evaluation of Mayne Pharma’s standalone value, the certainty and premium offered by the scheme, and the absence of competing offers.

Deloitte Corporate Finance’s report concludes that the scheme is both fair and reasonable, emphasizing that the all-cash consideration provides immediate and certain value to shareholders. The expert’s valuation incorporates detailed discounted cash flow analyses, considering Mayne Pharma’s key patented products such as NEXTSTELLIS®, ANNOVERA®, BIJUVA®, and IMVEXXY®, alongside ongoing patent litigation risks and market dynamics.

Transaction Details and Conditions

The scheme meeting is scheduled for June 18, 2025, to be held as a hybrid event in Melbourne and online. For the scheme to proceed, it must be approved by a majority of shareholders present and at least 75% of votes cast, followed by court approval. Additionally, regulatory approvals, including from the Australian Foreign Investment Review Board (FIRB), remain outstanding conditions precedent.

Cosette’s acquisition will be funded through a combination of existing cash reserves, equity financing from private equity firms Avista Capital Partners and Hamilton Lane, and debt financing arrangements. Upon completion, Mayne Pharma will be delisted from the ASX and become a wholly owned subsidiary of Cosette.

Implications for Shareholders and Market

Shareholders stand to benefit from a substantial premium and immediate liquidity. The scheme also removes exposure to operational and market risks inherent in Mayne Pharma’s standalone business, including ongoing patent litigation and competitive pressures in the pharmaceutical sector.

However, if the scheme does not proceed and no superior proposal emerges, Mayne Pharma shares may trade below the scheme consideration price, exposing shareholders to market volatility and business risks. The board has highlighted these risks in its recommendation materials.

Key executives, including CEO Shawn Patrick O’Brien, have interests aligned with the scheme’s success, with performance rights and retention bonuses linked to completion.

Looking Ahead

As the scheme meeting approaches, shareholders will weigh the certainty and premium offered against the potential for future value as a standalone company. The outcome will shape Mayne Pharma’s strategic direction and ownership structure, with broader implications for the Australian pharmaceutical sector.