Celltech still seeking City support
BIOTECH group Celltech has still to persuade major shareholders in Oxford GlycoSciences to back its £104m hostile bid for the business. The 182p-a-share cash offer trumps an agreed all-share deal OGS had made with Cambridge Antibody Technology.
The outcome of the battle will rest largely in the hands of OGS's two biggest investors, Amvescap and Fidelity. Between them they control 30% of OGS shares.
Celltech chief executive Peter Fellner has been drumming up support from his own shareholders but has not as yet visited the two main institutions. Following a series of telephone conversations with them, Fellner said: 'They told us they would think about it, but they didn't express a preference at this point.' Celltech is being advised by JP Morgan.
Fellner also released results for the year ended December. In his statement Fellner said the offer was 'the opportunity to acquire important tangible and intangible assets, including certain novel protein targets identified and patented by OGS that Celltech can harness into its extensive research and development capabilities'.
OGS chief executive David Ebsworth has rejected Celltech's bid as 'wholly inadequate' and said it offered 'no upside for shareholders'. OGS has cash resources of £137m and the Celltech offer falls well short of this asset.
Celltech, with 10 products in development, is one of the few biotechss with strong sales and royalties. Last year these amounted to £329.6m with royalties coming in at £76.7m. They helped lift net pre-tax profit before goodwill, amortisation and restructuring charges by 5% to £50.4m.
Celltech remains one of the best-funded in the sector. Cash at the end of the financial year was £105.1m, offset by a £31.2m loan note due in December 2003. The group revealed that as at 21 February the cash reserve had increased to £138.1m.
It has also renegotiated a £65m credit facility for another three years 'to retain flexibility in its future funding requirement.' Insiders say this may mean it will increase its takeover offer for OGS.
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