LONDON -(Dow Jones)- Cambridge Antibody Technology and Oxford Glycoscienses said Thursday they have agreed the terms of a recommended merger to create a leading European biotechnology company combining the key strengths of the two organizations.
Pro-forma net cash was GBP260.1 million as at 31 December 2002. Cost savings based on the removal of duplicated activities have been identified in the areas of corporate overhead, R&D and real estate. These savings are expected to have a cash effect of GBP10 million in the first full financial year following completion of the Merger.
In addition, further savings are expected from a portfolio review to focus R&D expenditure on the highest quality projects. The results of this review will be announced in November 2003.
Upon completion, OGS shareholders will receive 0.3620 new CAT shares for each OGS share 0.3620 new CAT ADSs for each OGS ADS.
Based upon CAT's closing price on 22 January, the Merger values each OGS share at 195.5 pence, and the entire share capital of OGS at GBP109.6 million. This represents a premium of 28.2%.
Following completion, which is expected to occur in March 2003, CAT shareholders will hold 64.3% and OGS shareholders will hold 35.7% of CAT.
CAT has received irrevocable undertakings from those OGS Directors who hold OGS Shares, representing 0.5% of OGS. It has also received nonbinding letters of intent to vote in favor from Invesco Asset Management and Fidelity Investments International in respect 28.7% of OGS.
Following completion, CAT will continue to be chaired by Professor Peter Garland, while Peter Chambre and John Aston will remain chief executive and chief financial officer respectively.
Dr David Ebsworth, currently chief executive of OGS, will be invited to join the CAT board as an executive director to assist in the integration process. After completion of that process, he will remain on the board as a non-executive director.
CAT said that the Merger will significantly strengthen its core capabilities in therapeutic development, by enhancing the discovery, preclinical and clinical development capabilities, while also adding strength and breadth to the product portfolio.
The enlarged group will also enjoy substantially greater financial strength and greater flexibility in meeting future funding requirements.
The Merger will create an enlarged entity with greater scientific, organizational and financial resources.
The enlarged group will have a stronger and broader portfolio, with two approved products, seven additional products in clinical trials and seven preclinical products
The Merger will significantly strengthen the enlarged group's core capabilities in research and development by combining CAT's leading human monoclonal antibody product development expertise with OGS' oncology drug discovery capabilities and target pool and by increasing the breadth of the discovery and preclinical portfolios.
It will have substantially greater financial strength. This will increase the ability to fund product development to later stages, thereby retaining greater value, and reduce the need for additional capital.
Edited Press Release
The name of CAT will be changed in due course as part of management's commitment to building a leading biopharmaceutical company.
The existing contractual employment rights, including pension rights, of the employees of both the CAT Group and the OGS Group will be fully safeguarded following completion of the merger.
CAT's recurring revenues, representing contract research revenues and income from licensing arrangements entered in to prior to the current financial year are expected to be in the range of GBP3 million to GBP4 million for the 2003 financial year.
Additional revenues may arise from technical and clinical milestone payments and any further licensing or contract research arrangements including extensions to existing arrangements.
Cash receipts from collaborators and licensees in the 2003 financial year are expected to be at least comparable to the 2002 financial year.
Significant increases in operating costs are expected during the current financial year as compared with the 2002 financial year. This reflects, in particular, an increase in spending on clinical trials on CAT's pipeline of product candidates. |
