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This represents the most significant strategic corporate expansion initiative to date for Paladin - a Canadian specialty pharmaceutical company - and is a decisive move to build critical mass and competitive differentiation in the South African pharmaceutical market which is currently valued at over $3.3 billion (R25.3 billion), an increase of 10% over 2010.

"This strategic partnership with Litha creates a stronger and more diversified commercial platform from which to extend our footprint in Sub-Saharan Africa," said Mark Beaudet, interim President and Chief Executive Officer of Paladin Labs Inc.

"The combination creates a locally empowered business with the commercial breadth to be a leader in the rapidly growing African healthcare markets of interest to us. Our combined focus on business development, sales and marketing and broad healthcare interests via pharmaceuticals, vaccines and medical devices will make us a formidable competitor for the long run on the African continent."

Litha currently operates within the pharmaceutical, vaccine and medical device markets and the enlarged company will now possess enhanced commercial capability, portfolio breadth and local empowerment. The merged group will look to solidify its business model in South Africa, as well as to further expand its African footprint in the sub-Saharan African healthcare market.

he strategic partnership between Paladin and Litha will build scale and open up further direct international licensing opportunities for the Litha Pharma Division, increasing deal flow and product acquisition opportunities. Moreover, with the combination of Pharmaplan, the Litha Pharma Division will become the Litha Healthcare Group's second largest division by revenue and most profitable by earnings.

"Pharmaplan is one of the fastest growing specialist pharmaceutical companies in South Africa, with an enviable market position in the private specialist and niche generics markets. The merging of our pharma division with Pharmaplan will not only boost our current product portfolio revenues, but also broaden our access to international pipelines and improve our current platform for expansion into new markets including biotech, oncology and aesthetic medicine." said Selwyn Kahanovitz, Chief Executive Officer of Litha Healthcare Group Limited.

Under the terms of the transaction, Paladin will acquire the 55.01% of Pharmaplan which it does not currently own. Litha will then acquire 100% of the share capital of Pharmaplan from Paladin in exchange for cash and the issuance of 169,090,909 shares in Litha at R2.75 per share. Paladin has also agreed to acquire an additional 72,989,078 shares of Litha from the Blackstar Group at R2.75 per share. Paladin will deploy an anticipated $48 million in cash and issue 88,948 shares at $44.97 per share to complete the combined transactions. As a result Paladin will own 44.52% of Litha, making it Litha's single largest shareholder upon closing.

Dr. Gert Hoogland, founder and CEO of Pharmaplan will head up the Litha Pharma Division, reporting to the Litha Healthcare Group CEO Selwyn Kahanovitz. In order to leverage strategic synergies and intra-company collaboration, Litha has also asked Dr. Hoogland together with Paladin's interim President and CEO, Mark Beaudet, and its VP of Business and Corporate Development, Mark Nawacki, to join Litha's Board of Directors effective the closing date.

The transaction is expected to be accretive to Paladin's EBITDA2 immediately upon closing. For perspective, had the transaction taken place effective January 1, 2011, Paladin would have reported at least an additional $25 million dollars in EBITDA for 2011. The transaction is subject to certain regulatory approvals including South African competition review and approval by shareholders of Litha and is expected to close on July 2, 2012.