The Deal

-- Chiron will issue 10.5 million to 10.8 million new shares ofstock in exchange for all shares of Cetus stock outstanding ata ratio of three-tenths of a share of Chiron stock for eachshare of Cetus stock. The ratio will be reduced if the marketprice of Chiron stock is more than $67 a share for a specifiedperiod before the close of the deal, targeted for the end of thisyear. If Chiron's stock is less than $49 a share, Cetus canterminate the merger unless Chiron agrees to an upwardadjustment of the ratio.

-- Cetus has 36 million shares outstanding on a fully dilutedbasis. After the deal, Chiron will have about 30 million sharesoutstanding.

-- Chiron will assume $145 million of Cetus debt.

-- In a separate deal, Hoffmann-La Roche will buy Cetus'GeneAmp polymerase chain reaction technology for $300million plus royalties.

-- Chiron Corp. will be the surviving entity. Cancertherapeutics will be marketed through Cetus.

H Shareholders meetings are slated for November. Regulatoryapprovals are required. The companies hope to complete themerger by the end of the year.

Financial

-- The merged company will have a $600 million in cash.

-- A significant charge related to the merger will be taken,and Chiron expects to show a loss in calendar 1992.

Products

-- The combined company will have 22 products in clinicaltrials and 16 products in preclinical development.

Management

-- William J. Rutter, chairman of Chiron, will be chairman ofthe combined company. Edward E. Penhoet, Chiron vicechairman and chief executive officer, and Gregory B. Lawless,Chiron president and chief operating officer, will retain theirtitles. Hollings C. Renton, president and chief operating officerof Cetus, will be responsible for the new company's cancertherapeutics and will join Chiron's board of directors. Ronald E.Cape, chairman and chief executive officer of Cetus, will joinChiron's board. A third Cetus member will be added to theboard after the merger.

Employees

-- The combined organization will have 1,400 employeesworldwide. Cetus will immediately eliminate 92 positions. Thesale of the PCR business will eliminate another 125 positions,reducing its workforce to 650. After the merger, the combinedcompany plans a further reduction of 10 percent of itsworkforce.

(c) 1997 American Health Consultants. All rights reserved.