Belgium's UCB to buy UK's Celltech for 1.5 bln stg
(Adds fund, more company and analyst comments, updates shares)
By Mark Potter and Bart Crols
LONDON/BRUSSELS, May 18 (Reuters) - Belgium's UCB agreed to buy Britain's biggest biotechnology firm Celltech for 1.53 billion pounds ($2.71 billion) on Tuesday, and snapped up the rights to Celltech (LSE: CCH.L - news - msgs) 's sought-after arthritis drug. The 550-pence-per-share cash deal will create Europe's second biggest bio-pharmaceutical company behind Denmark's Novo Nordisk , and bolster UCB (Brussels: UCBBt.BR - news) against potential cheap competition to its top-selling allergy and epilepsy drugs.
"This is the deal UCB needed to do," said Jan Van den Bossche, an analyst at Brussels-based brokerage Petercam, though he added the 28 percent premium to Celltech's closing share price on Monday was a full price.
The acquisition is the latest in a string of deals in the fast-growing healthcare sector as firms look for global reach. French drugmaker Sanofi-Synthelabo agreed last month to buy Franco-German rival Aventis (Paris: FR0000130460 - news) for about 51 billion euros ($61 billion).
Samir Devani, an analyst at Code Securities, said UCB's separate deal to license Celltech's most promising drug, CDP870 for rheumatoid arthritis, was likely to deter rival bidders.
"There's no reason for anybody to come in (with a rival bid) if the rights to CDP870 have already been signed over," he said.
Celltech has long been viewed as too small to survive on its own, particularly after a series of clinical trial flops left it reliant on CDP870. Analysts said previously rumoured suitors Switzerland's Serono (Virt-X: SEO.VX - news) and U.S. group Biogen were the most likely rival bidders if any were to emerge.
At 0920 GMT, Celltech shares were up 26 percent at 543-1/2 pence, after touching a 23-month high of 549p. UCB was down 4.3 percent at 33.58 euros as investors worried about the cost of the deal.
TRANSFORMATIONAL
The acquisitions is a transformational step for UCB, one of Europe's last remaining chemical-pharmaceutical hybrid companies, and gives a major boost to its pharmaceutical business. The Pharma unit generated about half of the firm's 3.0 billion euros ($3.6 billion) of turnover in 2003 and most of its profits.
UCB's biggest selling drug, hay-fever treatment Zyrtec, faces cheap generic competition in Europe and its U.S. patent is due to expire in 2007, although the firm is working on a follow-on prescription drug which it hopes will take its place. UCB is also fighting patent challenges to epilepsy drug Keppra.
Roch Doliveux, chief executive of UCB Pharma, said Celltech's areas of expertise fitted well with UCB's and the combined firm would be particularly strong in treatments for central nervous system disorders, inflammation and rheumatology.
Analysts think CDP870, to which UCB signed the rights, could become a so-called "blockbuster" drug, achieving over $1 billion a year in sales.
Celltech CEO Goran Ando said the deal would allow the British firm to see through the development of CDP870, and that the combined firm would have the resources to develop and market its own drugs without the need for partners.
Celltech had licensed CDP870 to Pharmacia Corp in one of the European biotechnology sector's most lucrative deals, but the agreement fell apart after the U.S. drugmaker was bought by Pfizer (NYSE: PFE - news) last year.
Ando said the deal on CDP870, which is not dependant on UCB's acquisition of Celltech, was "at least as good" as the one struck with Pharmacia, but declined to reveal the terms.
Tim Roberts, a fund manager at Cavendish Asset Management which owns Celltech shares, said UCB's offer was consistent with recent biopharmaceutical deals in the United States, but was a disappointing end to Britain's biggest biotechnology hope.
"If you bought into Celltech two or three years ago, you might have hoped to get more out of it than this," he said.
Some analysts also questioned whether UCB would have the muscle to take on big U.S. rivals with CDP870, which is likely to be the fourth drug in its class to reach the market.
UCB said it would finance the acquisition through bank loans and that it would boost earnings before goodwill and after cost savings in the second full year following completion.
It expects the deal to close by September and to generate about 100 million euros in annualised cost savings.
UCB is being advised by Lazard, while Morgan Stanley (NYSE: MWD - news) and JP Morgan are acting for Celltech.
(Additional reporting by Mark Bendeich and Ben Hirschler) |
