BioWorld International Correspondent
LONDON - Celltech Group plc, the UK's largest biotechnology company, has agreed to be taken over by UCB SA, of Brussels, Belgium, in an all-cash deal that values Celltech at about £1.5 billion (US$2.7 billion).
Celltech shareholders are being offered £5.50 per share, a premium of 27.8 percent to the closing price Monday, and a 26.3 percent premium to the average share price over the past three months. The £5.50 price tag is equivalent to $19.44 per American depository share.
Celltech will be merged with UCB's 6,600-strong pharmaceutical arm, UCB Pharma, and the combined entity, to be headquartered in Brussels, will rank as the world's fifth-largest biopharmaceutical company, with pro-forma revenues of €2.1 million, placing it behind Amgen Inc., Novo Nordisk A/S, Schering AG and Genentech Inc.
The companies agreed to combine following licensing discussions for Celltech's CDP 870, and also announced a deal for the anti-TNF-alpha antibody that will stand whether or not the acquisition goes ahead. Terms of the CDP 870 deal were not disclosed, but Celltech said the headline value was equivalent to the $280 million put on its previous deal with Pfizer Inc.
"This is a tremendously important day for Celltech - probably the most important since its inception in 1980," Peter Fellner, chairman, said in a conference call. "It is a transforming transaction for UCB, too."
Celltech shares (LSE:CCH) rose by £1.11 to £5.42 Tuesday, up 25.9 percent, on total volume of 57.4 million shares - more than 25 times its average trading volume. Analysts in London said there was a chance another bidder would emerge. Sam Fazeli, of Nomura International plc, said likely contenders were large U.S. biotechs. UCB, listed on Euronext in Brussels, is proposing to finance the deal with loans.
Goran Ando, Celltech's CEO, said that while there were a lot of overtures, UCB emerged as front-runner to license CDP 870 because of its specialist marketing skills and because of its knowledge of the anti-TNF-alpha market. Roch Doliveux, who became CEO of UCB Pharma in September, was responsible for in-licensing Remicade (also an anti-TNF-alpha antibody) in his former position as president of Schering-Plough International.
"I don't have to tell you about the importance of having a top-level champion for a product," Ando said.
But beyond assessing UCB Pharma as the best partner for CDP 870, Ando said being acquired by the Belgian company would remove Celltech's current need to have marketing partners for its products.
"The new proposed entity will have strength from day one to commercialize all its products," he said.
UCB Pharma is focused on neurology and allergy, with market-leading products in both the U.S. and Europe.
"What we provide is global reach for the combined entity's pipeline," Doliveux said. About 45 percent of the combined revenues will come from the U.S., and UCB also has sales forces in Japan, China and India. Acquiring Celltech will extend the neurology and anti-inflammatory portfolios, and add in oncology.
"We will be the leader in Europe and not far behind, in terms of revenue, a certain company called Genentech," Doliveux said. "This puts us ahead of many very reputable companies in Europe and the U.S. and with a global presence."
Doliveux said he expects CDP 870 to be launched by 2007, with five other products to follow before 2010. "Both companies are ready and willing for the next step," he said. "Celltech wanted to commercialize products itself - this gives them access to do that."
The four main board directors of Celltech have accepted positions on the UCB board, with Ando becoming deputy CEO of the combined group.
There is a promise of €100 million in cash savings from the merger, and the integration process will be handled by Peter Allen, Celltech's chief financial officer.
Research and development for the combined company will be based at Celltech's facilities in Slough, under the direction of Melanie Lee. UCB has 1,000 R&D staff and an R&D budget of €244 million in 2004, while Celltech has 450 R&D staff and a £106 million R&D budget.
The acquisition will further reduce the roster of biotechnology companies quoted in London. Celltech joined the London market in 1993 but Doliveux said that at present there are no plans for UCB to list there. Celltech ADRs will be delisted from the New York Stock Exchange.