* Australia's Treasurer says deal not in national interest * Cosette, a reluctant suitor, wanted to close an Adelaide plant * Mayne's shares slid 23% before being put on temporary trading halt (Updates with Mayne statement in paragraphs 5-6) By Christine Chen and Scott Murdoch SYDNEY, Nov 21 (Reuters) - Australia on Friday blocked a A$672 million ($435 million) buyout offer for Mayne Pharma from Cosette Pharmaceuticals after the U.S. drugmaker became a reluctant suitor and threatened to close a local plant. The decision by the country's centre-left government sent shares in Mayne tumbling 23% before it halted trading pending an update on the deal. Treasurer Jim Chalmers said his decision was in line with advice from the Foreign Investment Review Board (FIRB) that the proposal would be contrary to Australia's national interest. "This is about doing what is necessary to protect Australia's national interest, the security of our critical medical supply chains, local jobs and the local community," he said in a statement. In an after-market update on Friday, Mayne said in a statement the takeover was "unlikely to proceed" after failing to secure FIRB approval, which was required under the agreement between Cosette and Mayne. "Mayne Pharma is currently assessing its options and next steps," it said. The vast majority of Mayne shareholders had voted in favour of the takeover in June. Cosette did not respond to a request for comment. Cosette bid A$7.40 per share for Mayne in February but later tried to back out, saying a weaker financial performance from Mayne had resulted in a material adverse impact that rendered their agreement void. Cosette then threatened to close Mayne's Adelaide manufacturing plant that employs some 200 people if the deal went ahead. It is one of two main factories owned by Mayne, which makes branded and generic drugs, focusing on women's health, dermatology and infectious diseases. The other plant is based in Greenville, North Carolina. The deal was criticised by South Australian Premier Peter Malinauskas, who said in September he wanted Cosette blocked by the FIRB. Then, in mid-October, an Australian court rejected Cosette's request to abandon the takeover. Manoj Jain, Maso Capital co-founder and a Mayne shareholder, criticised the decision, saying it was not a good precedent if foreign buyers could easily walk away from agreed transactions, adding that he thought the equity risk premium to invest in Australia has now materially increased. "Cosette have successfully managed to achieve their goal which is contrary to corporate best practice and M&A protocols," he said. "In all deals, a buyer now knows they can leverage the FIRB condition to their advantage to either create a walk-away or engineer a price cut." The decision came just days after Australia's Takeovers Panel revived hopes of a deal by ruling that Cosette must accept any reasonable conditions Chalmers set in relation to the Adelaide plant, sending Mayne's shares sharply higher. Mayne's shares last traded at A$4.45 on Friday. Before Cosette's bid, the stock had traded at A$5.41. Chalmers said on Friday he had received advice from the Treasury and the FIRB that no conditions could be put in place that would adequately mitigate unique risks to the supply of critical medicines. ($1= 1.5521 Australian dollars) (Reporting by Scott Murdoch, Renju Jose and Christine Chen in Sydney; Editing by Edwina Gibbs) ((renju.jose@thomsonreuters.com;)) Keywords: MAYNE PHARMA M&A/COSETTE (UPDATE 4, PIX)
