here's the article re merger from the Financial Times. General feeling is, apparently, approval.
Wednesday June 16 1999
Companies News / UK & Ireland
UK biotech groups agree $1.1bn merger
By David Pilling, Pharmaceuticals Correspondent
Celltech and Chiroscience yesterday agreed to form Europe's biggest biotechnology company by market capitalisation in a merger widely expected to herald rapid consolidation in the fragmented sector.
The merger will create a company with one approved drug - Chirocaine, a local anaesthetic - as well as two drug candidates in late-stage development and eight further projects in the pipeline.
The merger, which will be made on the basis of 62 Celltech shares for every 100 Chiroscience shares, values the new company at £696m ($1.12bn).
Assuming no cost-cuts, Celltech Chiroscience will have 400 research staff and an R&D budget of £51m.
The deal, which must be approved by both sets of shareholders, represents a premium of 13.1 per cent on Monday's losing price of 259p for Chiroscience shares. Celltech's shareholders will hold 52.4 per cent of the new company.
"It's a defining moment for the UK sector," said Nick Woolf, biotech analyst at BancBoston Robertson Stephens. "There are no obvious cost- cutting synergies here, so it tells us that critical mass is important."
Analysts said other UK companies, such as the ill-fated British Biotech, might now be expected to merge.
The sector has been depressed for the past two years. Even news of the first drug approvals has failed to move share prices.
Peter Fellner, chief executive of Celltech, will head the enlarged company. John Jackson, non-executive chairman of the new group, and Peter Allen, chief operating officer, also come from Celltech.
John Padfield, chief executive of Chiroscience, will step down to become a divisional head at Nycomed Amersham, the Anglo-Norwegian life science company. His provisional acceptance of the job cleared the way for the merger, said people close to the deal.
Chiroscience also announced it had found a marketing partner for Chirocaine, which was dropped by Zeneca on anti-trust grounds after the UK drug group's merger with Astra of Sweden this year.
Dr Padfield said Chirocaine would be marketed in the US by Purdue Pharma and in all other areas, except Japan, by Abbott International. The deal was 50 per cent more beneficial to Chiroscience than that struck with Zeneca, he said.
Analysts said the two companies were a good fit. Chiroscience's US-based gene-discovery technology would beef up Celltech's science, while the latter's strong medium-term pipeline would fill gaps in Chiroscience's portfolio. With £80m in cash in the bank, the new company was expected to make further acquisitions, they said.
Flemmings advised Celltech and Lehman Brothers acted for Chiroscience. Celltech shares closed down 8½p to 464p, while Chiroscience rose 21p to 280p. |
