AstraZeneca announces major long-term strategic investment in biological
therapeutics with a recommended £702 million cash offer for Cambridge Antibody
Technology Group plc at 1,320p per share and 1,320p per ADS
Summary
The boards of AstraZeneca and CAT announce that they have agreed terms of a
recommended cash offer to be made by AstraZeneca to acquire the entire issued
and to be issued share capital of CAT not otherwise held by AstraZeneca. The
Offer for each CAT Share will be at 1,320 pence in cash and the Offer for each
CAT ADS will be at 1,320 pence in cash, equivalent to US$24.96 per ADS (based on
the exchange rate as at 12 May 2006). The Offer values CAT's existing issued
share capital, excluding AstraZeneca's existing shareholding in CAT, at
approximately £567 million and the entire issued share capital of CAT at
approximately £702 million.
Building on the success of an existing collaboration, and recognising the
increasing importance of biotechnology in medical research, CAT will become
central to AstraZeneca's plans to establish a major international presence in
the research and development of biological therapeutics. AstraZeneca's science
base already possesses discovery and development capabilities for new biological
medicines which will be combined with those of CAT and expanded through further
investment. This enhanced research capability, combined with AstraZeneca's
global development, marketing and sales resources, will establish an
international platform capable of accelerating the delivery of new medicines in
AstraZeneca's prioritised disease areas, embracing both monoclonal antibodies
and novel biological entities.
Highlights
• In late 2004, AstraZeneca and CAT entered into a Collaboration
and Licence Agreement jointly to discover and develop human monoclonal
antibodies and AstraZeneca acquired a shareholding in CAT that currently
represents approximately 19.2% of the issued share capital.
• AstraZeneca now intends to create a major R&D capability to
deliver biological therapeutics, and the integration of CAT is central to these
plans. The new organisation will be led from CAT's Cambridge headquarters and
will be distinct from but complementary to AstraZeneca's small molecule
capability.
• CAT's capabilities, when combined with AstraZeneca's global
development and marketing expertise, will deliver an expanded pipeline of novel
biological therapeutics to address unmet medical needs of patients in
AstraZeneca's targeted disease areas.
• AstraZeneca's ability to bring additional resources and
capabilities to CAT will allow it to develop CAT's technology platform beyond
its current capability and across a number of therapeutic areas including
Respiratory & Inflammation, Oncology & Infection, Neuroscience, Cardiovascular
and Gastro-intestinal.
• CAT also provides AstraZeneca with several other substantial
assets beyond its current scientific capabilities. These include a royalty
stream on the sales of HUMIRA(R), potential milestones and royalties on CAT's
other licensed products and access to CAT's proprietary pipeline (including
CAT-3888 in Phase II and CAT-354 in Phase I), which will be integrated into
AstraZeneca's development portfolio. In addition, CAT had a balance of net cash
and liquid resources of approximately £152 million as at 31 December 2005.
• The acquisition will not alter AstraZeneca PLC's EPS guidance
or its share repurchase programme for 2006.
The Offer
• The Offer represents a premium of approximately 66.9% to the
closing mid market price of CAT's Shares on the London Stock Exchange of 791
pence per share and 68.2% to the closing mid market quotation of CAT's ADSs on
NASDAQ of US$14.84 per ADS, each on 12 May 2006 (being the last dealing day
prior to the date of this announcement) and a premium of 88.0% to CAT's average
price of 702 pence per share and a premium of 98.7% to CAT's average price of
US$12.56 per ADS over the last twelve months prior to the date of this
announcement.
• The directors of CAT, who have been so advised by Morgan
Stanley, consider the terms of the Offer to be fair and reasonable. In providing
its advice, Morgan Stanley has taken into account the commercial assessments of
the directors of CAT.
• The directors of CAT intend unanimously to recommend that CAT
Shareholders accept the Offer, as the directors of CAT have irrevocably
undertaken to do in respect of their own beneficial shareholdings.
• A Loan Note Alternative will also be made available to all CAT
Shareholders (other than any CAT Shareholders in any Restricted Jurisdiction,
which includes the United States).
• The Offer is conditional, amongst other things, upon receiving
the required regulatory clearances. Further information on the terms and
conditions to which the Offer will be subject are set out in Appendix 1 and will
be set out in the Offer Document, which AstraZeneca intends to despatch to CAT
Shareholders as soon as practicable.
Irrevocable undertakings
AstraZeneca has received irrevocable undertakings to accept the Offer from each
of the directors of CAT, in respect of 190,569 CAT Shares in aggregate,
representing approximately 0.36 per cent. of the existing issued share capital
of CAT. All of these undertakings will remain binding notwithstanding a higher
competing offer.
Further details of these irrevocable undertakings are set out in Appendix 3 to
this announcement.
Commenting on the Offer, David Brennan, Chief Executive Officer of AstraZeneca
PLC, said:
'This acquisition represents a major long-term strategic investment by
AstraZeneca in novel biological therapeutics. It is our intention to both expand
and broaden the scope of our discovery and development pipeline and we expect
that, by 2010, up to a quarter of our candidates for full scale development will
be biological therapeutic agents.
'The success of the collaboration over the last two years has demonstrated
AstraZeneca's and CAT's complementary skills and expertise. We will now build on
this success by combining CAT's research and development capability in novel
biological therapeutics with our own expertise in discovery, global product
development and sales and marketing. Together we will create, for the long term,
an opportunity to introduce more medicines that will deliver real benefit to
patients worldwide.'
Dr. Paul Nicholson, Chairman of CAT, said:
'After careful consideration, the board has unanimously decided to recommend the
Offer to shareholders. The Offer recognises CAT's leading position in the
discovery and development of new antibody medicines and provides shareholders
with an attractive premium through a cash offer.
'The Offer represents the successful culmination of CAT's development since its
founding in collaboration with the Laboratory of Molecular Biology of the UK
Medical Research Council to the point where the excellence of its technologies
and capabilities is now recognised globally. HUMIRA(R) is the first marketed
product to come from CAT's technologies and the first blockbuster product to
come from the UK biotechnology industry. We are extremely pleased that
AstraZeneca has recognised those qualities through this acquisition,
demonstrating the successful growth and development of CAT as a UK
biopharmaceutical company.'
Peter Chambre, CEO of CAT, said:
'CAT has developed outstanding capabilities in the rapidly growing field of
antibody therapeutics. The excellent progress of the strategic alliance with
AstraZeneca since December 2004 has demonstrated the power of combining the
capabilities of both organisations and reflects the skills and dedication of CAT
and AstraZeneca's people. The Offer represents the next logical step in the
successful development of CAT. By enabling the resources of AstraZeneca to be
committed to realising the full potential of the CAT technologies and
capabilities, there is the opportunity to develop a global leadership position
in biological therapeutics and a major pipeline of new biological medicines for
the benefit of patients. We are very excited about this next opportunity for
the people who have made such an important contribution to the success of CAT.'
Goldman Sachs International is acting as financial adviser to AstraZeneca.
Goldman, Sachs & Co. is acting as dealer manager in the United States for
AstraZeneca. Morgan Stanley is acting as financial adviser and joint corporate
broker to CAT. JPMorgan Cazenove Limited is acting as joint corporate broker
for CAT.
This summary should be read in conjunction with, and is subject to, the full
text of the following announcement. Appendix 2 of this announcement contains the
sources and bases of certain information used in this summary and in the
following announcement. Appendix 4 of this announcement contains definitions of
certain terms used in this summary and the following announcement... |
