By Lisa Seachrist

Washington Editor

London-based Amersham International plc and Pharmacia & Upjohn, based in Sweden and the U.S., said they intended to merge their life sciences divisions creating what would be the largest biotechnology supply company in the world.

The two pharmaceutical and health care firms proposed the pending merger today. The deal will situate the resulting company, Amersham Pharmacia Biotech Ltd., in position to garner $700 million in sales in an estimated $3 billion market and to employ approximately 3,600 employees worldwide.

"We are really hitting the ground running with this merger," said Ron Long, currently group manager of Amersham Life Sciences and future CEO of the merged company. "We expect the integration of the two companies will be very smooth."

Amersham -- the first U.K. company to be privatized by former Prime Minister Margaret Thatcher in 1982 -- brings to the merger expertise in producing specialized "tagged" compounds used in molecular biology as well as in automated sequencing.

Pharmacia & Upjohn -- the pharmaceutical giant that emerged from a 1995 merger of Sweden's Pharmacia AB, of Uppsala, and The Upjohn Co., of Kalamazoo, Mich. -- brings to the table the resources of its subsidiary, Pharmacia Biotech AB, of Uppsala, with its expertise in separation products and automated systems used in molecular biology laboratories.

Deal Did Not Involve Cash Exchange

The merger involves no money changing hands, however. Instead, Amersham will hold a 55 percent interest in the new company and Pharmacia & Upjohn's stake will be 45 percent. The companies are under due diligence to put their best efforts into making the new company a public entity by January 2000. The new firm will be based in Uppsala.

Both Amersham and Pharmacia & Upjohn will each nominate three executive directors and one non-executive director to the new company's board of directors.

From January 2000 onward, Pharmacia & Upjohn will have a put option on the new company's stock, while from January 2004 Amersham will have a call option over Pharmacia & Upjohn's shares.

"This merger makes an infinite amount of sense," said Nigel Barnes, a health care analyst at Merrill Lynch in London. "Pharmacia & Upjohn has the hardware and Amersham has the consumables to compete in the genomics area that has become increasingly competitive."

Barnes noted that this is likely to be one of many mergers in the biological supply industry. "The genomics industry has given the industry a lot of incentive to consolidate," Barnes said.

"This is an enormous opportunity for us to provide the tools that will have an impact on the discovery of new pharmaceutical and biotechnology products into the next century," Long said. "We are very excited about this merger."

Arne Forsell, who is president and CEO of Pharmacia Biotech and will become the new company's chief operating officer, agreed with Long, noting that the two companies have complementary management styles as well as complementary product profiles.

"We really see that we share common goals," Forsell said. "All of our negotiations have allowed us to quickly come to this point of announcing the merger. It takes strong cultural compatibility to organize the plan so quickly."

The merger is on hold until July 17, while the companies jump through a series of regulatory hoops. At that point Amersham Pharmacia Biotech Ltd. will be managed by a team composed of Amersham and Pharmacia & Upjohn executives. On Oct. 1, Long and Forsell will lead Amersham Pharmacia Biotech Ltd. as a stand-alone company. *