BioWorld International Correspondent
LONDON - Amersham plc, the UK's largest life sciences company, agreed to be taken over by General Electric Co. in a £5.7 billion (US$9.5 billion) deal that would create a $13 billion turnover business with a vision to drive the development of personalized medicine.
Speaking at a press conference in London, Jeffrey Immelt, GE chairman and CEO said the merger "opens up a new chapter in health care," adding that the combination would accelerate development of molecular imaging and personalized medicine, allowing for the prediction and treating of disease with tailored therapies "in a way no one else could accomplish."
The recommended deal would give Amersham shareholders 0.4367 new GE shares for every Amersham share, valuing them at £8 each. That is a 45 percent premium to the closing price of £5.72 on Oct. 8. The new shares would represent 3 percent of GE's overall equity.
Amersham will be combined with GE Medical under a new banner called GE Healthcare Technologies, to be based in the UK. Amersham CEO William Castell will become CEO of the merged entity and will join GE's board. Joseph Hogan, senior vice president of General Electric, will continue to lead the GE Medical business.
Immelt said, "It is critical to have the best leadership team in the world, to pull the vision together, get synergies and work on future technology."
Castell, who joined London-based Amersham in 1989 and has since taken it through a series of mergers, said he had been talking to Immelt about a possible combination for more than two years.
"This business combination gives us a leadership position in today's diagnostic market and allows us to take the vision of molecular medicine forward to personalized medicine, tailored therapeutics and diagnostics," he said. "We will be predicting disease because of genetic predisposition, finding disease early, profiling cancers to get the right therapeutics and tracking disease using imaging technology."
That vision is based on marrying GE's X-ray, MRI and PET scanning machines with Amersham's imaging agents and radiopharmaceuticals.
Immelt said there would be cost savings of between $300 million and $400 million - 3 percent of the combined business' total cost base - most of which would come from merging administrative functions. Amersham has 10,000 staff world wide, and Immelt said he did not expect any cuts on the technology and sales sides of the business.
Synergies will come from making better use of distribution channels and providing fast-track access for each other's products. General Electric expects to use Amersham's sales structure to build its business in Japan and to sell its imaging technology and services to Amersham clients in the pharmaceutical industry.
Amersham had sales of £1.6 billion in 2002, from two divisions: Amersham Health, which develops and markets imaging agents, and Amersham Biosciences, which develops protein separation equipment and discovery systems. Interim results show that in the six months ended June 30, sales were £808 million.
"Today's businesses are profitable and growing quickly," said Immelt. "The real vision is how they play together in the future."