The boards of two leading UK biopharmaceutical companies, Celltech plc of Slough and Cambridge-based , have announced that they have agreed terms for a merger of their businesses.
Celltech merger with Chiroscience Group
The merged company, Celltech Chiroscience plc, will be one of the largest biopharmaceutical companies in Europe, with a broad and innovative new product portfolio and outstanding drug discovery and development capabilities. The enlarged group will have over 400 research and development staff and current combined annual research and development expenditure of some 51 million.
The enlarged group will have a strong financial profile, with some 80 million in cash and liquid investments.
The merger will be effected by way of a recommended all share offer to be made by Flemings on behalf of Celltech for all the existing issued (and to be issued) share capital of Chiroscience.
Following completion of the merger offer, the executive directors of the enlarged group will be:
Peter Fellner - Chief Executive Officer
Peter Allen - Chief Operating Officer
Christine Soden - Chief Financial Officer
Bob Jackson - Research & Development Director
Melanie Lee - Director of Discovery
John Jackson has agreed to continue in his role as non-executive Chairman for a further three years. Hugh Collum will be non-executive Deputy Chairman. Marvin Jaffe and Barry Price will join as non-executive Directors from the Chiroscience board and, upon completion of the Merger Offer, Stewart Siddall and Robert Thian will be resigning as non-executive Directors from the Celltech board and Ron Cape from the Chiroscience board.
Following the successful conclusion of the merger discussions and the completion of worldwide licence agreements for Chirocaine, Dr John Padfield, currently Chief Executive of Chiroscience, has conditionally accepted an offer to take up the position of chief executive of Nycomed Amersham's imaging division and a seat on the main board of Nycomed Amersham plc. Dr Padfield is expected to take up this position following completion of the merger offer.
Andy Richards, a founder of Chiroscience, has today announced his intention to leave Chiroscience to concentrate on directing investment into new product-focused and internet-based healthcare companies as one of the managing partners of Veritas Venture Partners.
It is proposed that Christine Soden becomes non-executive chairman of ChiroTech, upon the completion of the merger offer.
Benefits of combining Celltech and Chiroscience
The Directors of both Celltech and Chiroscience believe that there will be significant competitive advantages created by the Merger, particularly:
The enlarged group's larger and broader new product portfolio and drug discovery pipeline will create a more diversified spread of risks for investors in both companies.
The management teams of both companies will be combined in order to capitalise upon and maximise the considerable skills and capabilities of its people.
It is expected that appreciable cost savings can be achieved within the enlarged group, particularly by eliminating duplication from the combined infrastructure. These cost savings are expected to be obtained within the enlarged group's first full financial year, following completion of the merger offer. Celltech intends to extend its current financial year end to 31 December 1999.
One of the enlarged group's key goals will be to become financially self-sustaining and profitable, and in recent years both Celltech and Chiroscience have moved significantly closer to achieving this. The merger is expected to assist in securing these goals.
Commenting on the merger, John Jackson, Chairman of Celltech, said: 'Celltech was the first dedicated biotechnology company in the UK. This merger between two high quality British companies creates one of Europe's leading biopharmaceutical companies. With its wider skills base and considerable financial strength, we look forward to creating significant value for our shareholders and staff.'
Commenting on the merger, Hugh Collum, Chairman of Chiroscience, said: 'We have always advocated that consolidation within our sector of the pharmaceutical industry was essential to provide the critical mass necessary to build sustainable profits and cashflow whilst minimising the risks associated with a small product pipeline.
'We also have to compete with the major drug discovery companies which have substantial capacity to create new proprietary targets. By combining the strengths of Celltech and Chiroscience - which are arguably the strongest biopharmaceutical companies in the UK - we have now reset the model for success.
'When completed, this merger will mark the end of Dr Padfield's leadership of Chiroscience; during his tenure, John has helped build Chiroscience and attain its current strength and position as one of the first gene-to-drug biopharmaceutical companies. We thank John Padfield and Andy Richards for their part in building the company to this stage and, in particular, for successfully concluding the commercialisation strategy of Chirocaine, as announced today. We wish them both well in their exciting new careers.'
Commenting on the merger, Peter Fellner, Chief Executive of Celltech, said: 'The enlarged group will have an exceptionally strong profile, in terms of both its drug development and discovery pipeline and its financial resources. This merger represents an outstanding opportunity to develop a substantial biopharmaceutical business, based upon Celltech and Chiroscience's innovative product portfolio and pioneering drug discovery capabilities.'