India Firm to Buy Natrol

CHATSWORTH, Calif.Natrol (NASDAQ:NTOL) signed a definitive merger agreement for Plethico Pharmaceuticals Ltd. of India to acquire all outstanding NTOL shares for $4.40 per share; based on current stock data, this could amount to approximately $80.8 million. The transaction will include an initial general tender offer in cash by a wholly-owned subsidiary of Plethico for all outstanding shares, followed by a second-step, cash-out merger in which all remaining untendered Natrol shares will be acquired at the same net cash price per share. All Natrol stock options will receive cash equal to the excess, if any, of $4.40 over their exercise price.

Boards from both Plethico and Natrol have approved the deal, which is still subject to certain conditions, including the valid tender in the offer of a majority of the fully diluted Natrol common stock, and other customary conditions.

The goal in the initial tender offer is have Plethico own at least 90 percent of outstanding NTOL shares. Natrol has granted Plethico a top-up option, exercisable under certain limited circumstances, to help complete the merger even if Plethico does not reach 90-percent ownership during the initial tender period. Plethico also agreed to reserve the right to commence a subsequent offering period if it owns less than 90 percent upon completion of the initial tender offer period. Plethicos CFO Sanjay Pai reported his company would fund the deal through the $75 million raised in convertible bonds, with the coming from the proceeds from its initial public offering.

Wayne M. Bos, president and CEO of Natrol, said the transaction completes a process initiated and directed by Natrols board of directors to maximize value for stockholders. We have gained a solid reputation in our market niches and believe the merger with Plethico will also be a win-win for our customers and employees, he said. He further noted Natrol's revenue, is expected to jump from$65.6 million in 2006 to $90 million in 2009 due to contributions from the three acquisitions it made in the last 12 months.

Shashikant A. Patel, chairman and managing director of Plethico, said the acquisition will help Plethico consolidate its position as a leading global herbal/nutraceutical player. The acquisition brings under our fold a truly professional entity which has a very strong presence in the United States, in addition to operations in the United Kingdom and Hong Kong, he added. Accessing these markets will make Plethico a truly global player and will expand upon our international presence in Commonwealth of Independent States (CIS), Africa, South East Asia, Latin America and GCC (Gulf Cooperation Council).

Natrol said it expects the tender offer to be commenced on Nov. 27, with the tender offer open for 20 business days from commencement, subject to extension under certain circumstances. The acquisition is expected to be completed during the first quarter of 2008.