I guess we're pretty square now?: $9-10/share-cash "Catalytica to Sell Pharmaceutical Operations to DSM and
8/2/0 18:47 (New York)
Spin-off Remaining Businesses to Stockholders
Business Editors & Health/Medical Writers
MOUNTAIN VIEW, Calif.--(BW HealthWire)--Aug. 2, 2000--Catalytica,
Inc. (Nasdaq: CTAL) and DSM announced today that DSM will acquire
Catalytica's pharmaceuticals business through the purchase of
Catalytica, Inc. for approximately $750 million plus the assumption of
debt, for a total current value of approximately $800 million. The
transaction is structured as a merger of a wholly-owned U.S.
subsidiary of DSM with Catalytica and a taxable spin-off of the
Catalytica Combustion Systems and Catalytica Advanced Technologies
businesses as a single entity to Catalytica stockholders. As a result,
Catalytica will operate as a subsidiary of DSM and the Catalytica
Combustion Systems and Catalytica Advanced Technologies businesses
will comprise a stand-alone company to be called Catalytica Combustion
Systems. Shares of the spin-off company will be distributed one day
prior to the effectiveness of the merger.
In addition to distribution of Catalytica Combustion Systems,
stockholders of Catalytica will receive proceeds from the sale of
Catalytica, subject to certain adjustments. Among the adjustments is
the tax liability incurred by Catalytica with respect to the spin-off.
The merger is subject to customary closing conditions, including the
approval of Catalytica stockholders and expiration or termination of
the waiting period under the Hart-Scott Rodino Antitrust Improvements
Act. The parties expect the transaction to be completed in the fourth
quarter of 2000.
"This transaction brings value to our stockholders for our
pharmaceuticals business and will also enable us to bring them a new
and separate entity focused in the energy technology sector," stated
Ricardo Levy, president and CEO of Catalytica, Inc. "With dynamic
changes happening in the power generation market, we believe the Xonon
Cool Combustion technology with its near zero pollution solution is
well positioned to address the needs of this rapidly growing market."
Craig Kitchen, recently appointed president and CEO of Catalytica
Combustion Systems, will remain president and CEO of the newly created
public entity. Ricardo Levy, will become chairman of the board of
directors of Catalytica Combustion Systems, Inc.
The newly created division within DSM will be named DSM Catalytica
Pharmaceuticals. Michael Thomas, current president and CEO of
Catalytica Pharmaceuticals, will head the North American operations of
DSM Catalytica Pharmaceuticals.
Peter Elverding, chairman of the DSM Managing Board, stated,
"Through this acquisition, DSM gains a major geographic presence in
the United States and thus enhances its worldwide leadership in the
industry. Catalytica is a high quality supplier that has several
unique capabilities to serve this dynamic market. In particular,
Catalytica's state-of-the-art sterile facility and strong formulation
development capabilities will be a powerful complement to our
manufacturing."
Ricardo Levy also commented on the acquisition, "The combined
company will have the critical mass and capabilities to streamline all
of the operations in the pharmaceutical production cycle and provide
excellent added value to its pharmaceutical customers. The combined
entity, which will have a broader customer base and an international
presence, should enable a smoother transition for Catalytica as the
Glaxo products from the original supply agreement transition out of
the Greenville facility."
On learning of the transaction, Robert A. Ingram, chief executive
of Glaxo Wellcome, plc said, "This transaction brings together two
very reputable players in the outsourcing market and provides a
combination of capabilities that will serve well the pharmaceutical
industry and customers like Glaxo Wellcome."
The cash proceeds to the stockholders of Catalytica from this
transaction are subject to certain adjustments, including a reduction
in proceeds for the tax liability incurred by Catalytica with respect
to the spin-off. The tax liability, which is expected to be a material
amount, will be based on the value of Catalytica Combustion Systems as
determined by the weighted average trading price of the spin-off
company on the first full day of trading. In addition, the cash
proceeds will be reduced by contributions by Catalytica to Catalytica
Combustion Systems to provide the company with adequate operating
capital, which are currently expected to be approximately $40 - $50
million. These reductions are expected to be partially offset by
proceeds from the exercise of options and warrants to purchase
Catalytica common stock prior to the merger.
Catalytica estimates that the cash proceeds to stockholders may be
in the range of $9.00 - $10.00 per share but could be significantly
higher or lower depending upon the tax liability that Catalytica
incurs for the spin-off of Catalytica Combustion Systems. Catalytica
currently owns 85% of Catalytica Combustion Systems, of which all
shares will be distributed ratably to Catalytica stockholders.
Catalytica stockholders will be required to pay taxes on the net gain
of proceeds from this transaction.
Options to purchase Catalytica stock will not be assumed by DSM.
All unexercisable options shall become exercisable in connection with
the merger, but will be cancelled and terminated upon the
effectiveness of the merger.
Catalytica was advised by Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation in this transaction.
Morgan Stanley Capital Partners III, L.P. and certain affiliates
of Catalytica own approximately 32% of the voting stock of Catalytica,
and have signed agreements to vote in favor of this transaction.
Catalytica has agreed to pay a fee of $20 million plus up to $5
million in expenses to DSM under certain circumstances, including the
termination of the agreement to enter into an agreement in connection
with another offer to purchase the company.
Catalytica, Inc. has scheduled a conference call to be held on
Thursday, August 3, 2000 at 9:30 a.m. (PDT). This call will be
accessible live via the Internet at catalytica-inc.com or
via telephone at 888/850-2534 (719/457-2633 for international
callers). A replay of the call will also be available via the Internet
or via telephone 24 hours/day for 72 hours beginning at 12:30 p.m.
(PDT) on August 3, 2000 and ending at 12:00 a.m. (PDT) on August 7,
2000. To connect to the replay via telephone, simply dial 888/203-1112
(719/457-0820 for international callers), reference pass code 921731.
DSM (www.DSM.nl) is a highly integrated international group of
companies headquartered in Heerlen, the Netherlands that is active
worldwide in the field of life science products, performance materials
and chemicals. The group has annual sales of EUR 6.3 billion ($5.9
billion USD) and employs about 21,800 people at more than 200 sites
worldwide.
Catalytica, Inc. (www.Catalytica-inc.com) finds new pathways to
improve processes -- reducing time, waste, and costs. It operates
through its subsidiaries: Catalytica Pharmaceuticals, Catalytica
Combustion Systems, and Catalytica Advanced Technologies. Catalytica
Pharmaceuticals applies innovative and patented catalytic technologies
and other chemical processes to improve the steps for manufacturing
pharmaceuticals and finds better and more efficient ways to produce
products in commercial scale quantities; Catalytica Combustion
Systems' unique Xonon Cool Combustion technology enables gas turbines
to produce essentially pollution-free power; Catalytica Advanced
Technologies serves as the incubator for new catalytic technologies
for industrial applications.
This press release contains "forward-looking statements" (as
defined under federal securities law) regarding the spin-off and the
planned merger of DSM and Catalytica. The actual events, including the
ability of the companies to obtain the approval of Catalytica's
stockholders, to close the spin-off and the merger transaction, may
differ materially and adversely from those discussed in this press
release. Factors that may cause such a difference include, without
limitation, inability to obtain Catalytica stockholder approval of the
transaction, failure to satisfy the closing conditions set forth in
the merger agreement, potential litigation, and other risks associated
with acquisitions. There can be no assurance that the spin-off and the
merger will be completed on the intended schedule. For additional
information about factors that could affect the business of
Catalytica, see the documents filed by Catalytica with the United
States Securities and Exchange Commission.
--30--gdr/sf*
CONTACT: Catalytica, Inc.
Jackie Cossmon, 650/960-3000, ext. 6204 |
