RNS No 7371n
AMERSHAM INTERNATIONAL PLC
1st July 1997
Part 2
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION IN OR INTO CANADA,
AUSTRALIA OR JAPAN.
NYCOMED AMERSHAM
Nycomed and Amersham to merge
1. Introduction
The Boards of Nycomed ASA ("Nycomed") and Amersham International
plc ("Amersham") announce that they have unanimously agreed the
terms of a proposed merger of the two companies (the "Merger").
The holding company for the Merged Group will be called Nycomed
Amersham plc ("Nycomed Amersham").
The Merger creates a global group with the critical mass, focus
and technology to build further on its world leadership positions
in in-vivo diagnostic imaging agents and research-based
biotechnology supply, which the Boards of Nycomed and Amersham
believe will be two of the key long-term medical growth markets.
The Merger brings together many complementary strengths including
powerful global distribution, low-cost production, significant
R&D investment and a strong management team.
Under the terms of the Merger:
* Nycomed shareholders will be offered 53 per cent. of the
enlarged issued ordinary share capital of Nycomed Amersham.
* Amersham shareholders will own 47 per cent. of the enlarged
issued ordinary share capital of Nycomed Amersham, assuming
acceptance of the Merger Offer in full.
All Nycomed shareholders will also receive a special dividend
from Nycomed of NOK 5.62 (46p) per share upon completion of the
Merger amounting, in aggregate, to NOK 576 million (#47 million).
This dividend will be payable to Nycomed shareholders as of the
dividend record date, which is expected to be shortly before the
Merger Offer becomes unconditional.
Pro forma combined historic revenues for Nycomed Amersham would
be approximately #1.5 billion (NOK 14.8 billion), and pro forma
combined historic profits before interest, tax and restructuring
charges would be approximately #244 million (NOK 2.5 billion), as
adjusted to UK GAAP. The pro forma financial information assumes
completion of the Amersham Pharmacia Biotech Merger and the basis
of preparation is set out in Appendix VII.
Nycomed Amersham would have a market capitalisation of
approximately #1.8 billion (NOK 21.8 billion), based on the
closing prices of Amersham and Nycomed on 27th June, 1997, the
last practicable date before the date of this announcement.
Nycomed Amersham would have, based on the last audited annual
accounts for each of Nycomed and Amersham, combined annual
research and development investment of approximately #140 million
(NOK 1.4 billion). The Merged Group will have approximately
11,600 employees, including employees of Pharmacia Biotech who
will join the Amersham Group on completion of the Amersham
Pharmacia Biotech Merger.
The Board of Nycomed Amersham will be drawn equally from Nycomed
and Amersham. Nycomed's existing Chairman, Johan Fredrik
Odfjell, will become Chairman of Nycomed Amersham, and Richard
Lapthorne, currently Chairman of Amersham, will be Deputy
Chairman of Nycomed Amersham. The current Chief Executive of
Amersham, Bill Castell, will be Group Chief Executive Officer of
Nycomed Amersham and Nycomed's current President and Chief
Executive Officer, Svein Aaser, will be Group Deputy Chief
Executive Officer and Chief Executive of Nycomed Amersham's
Imaging business. Andrew Allner, currently Finance Director of
Amersham, will be Nycomed Amersham's Finance Director. Trond
Berger, currently Chief Financial Officer of Nycomed, will be
Nycomed Amersham's Corporate Development Director.
The corporate and worldwide Imaging headquarters of Nycomed
Amersham will be located in Buckinghamshire, UK, with the
European Imaging and Pharmaceuticals divisional headquarters
located in Oslo, Norway.
2. Benefits of the Merger
The Merger creates a global leader in two distinct and important
innovative medical markets, which are well poised for continued
growth and expansion into the next century. The Boards of
Nycomed and Amersham believe that Nycomed Amersham will be the
world's leading company in the development, manufacture and
distribution of in-vivo diagnostic imaging agents. In addition,
the recently announced merger between Amersham Life Science and
Pharmacia Biotech will result in Nycomed Amersham becoming the
world's leading research-based biotechnology supplier. Nycomed
Amersham also benefits from a European pharmaceutical business
with a strong and immediate product launch pipeline.
The Boards of Nycomed and Amersham believe that the Merger will
have the following principal benefits:
* World leadership in in-vivo diagnostic imaging agents
The Boards of Nycomed and Amersham believe that Nycomed
Amersham will be the world's leading provider of in-vivo
diagnostic imaging agents, with combined worldwide sales of
over #670 million (NOK 6.8 billion) and combined investment
in imaging research and development of some #79 million (NOK
796 million), based on the historic results of Nycomed and
Amersham.
Nycomed's and Amersham's imaging interests are
complementary. Nycomed's leadership in x-ray contrast media
and strength in magnetic resonance imaging ("MRI") are
complemented by Amersham's global leadership in
radiopharmaceuticals for the nuclear medicine industry. The
following table illustrates the market position of Nycomed
Amersham:
Ranking by imaging agent sales value
X-ray Nuclear MRI
medicine
World 1st 1st 2nd
USA 1st 3rd 2nd
Europe 1st 1st 2nd
Japan 2nd 1st 2nd
Note:These are management estimates of end-customer sales
into the market attributed to the innovator i.e. to the
party which has intellectual property rights to the
product. These rankings are based on estimates of
market share prepared by the management of Nycomed and
Amersham.
* Selling synergies
The combination of Nycomed's and Amersham's complementary
geographic coverage will give Nycomed Amersham leading
positions in the major diagnostic imaging agent markets of
the United States, Europe and Japan. Nycomed and Amersham
sales teams share a common core customer base, centred on
the imaging (radiology) departments of major hospitals.
Increased critical mass and strengthened product portfolios
in cardiology, oncology and neurology will allow Nycomed
Amersham to expand direct promotion to managing clinicians
within the same hospitals and thereby increase the number of
patients referred for its imaging agents.
In the United States, Nycomed Amersham, with one of the
broadest imaging agent portfolios and several major branded
products, will be able to compete even more effectively for
the increasing proportion of business secured via group
purchase contracts.
* Complementary R&D portfolios
Nycomed's established strength in chemistry will be
reinforced by Amersham's competence in the biosciences.
Amersham's cellular and molecular biology skills base will
improve the ability of Nycomed Amersham to anticipate and
develop the increasingly sophisticated functional
diagnostics that will be required for medical practice into
the next century. Both companies have extensive
intellectual property rights and the formation of Nycomed
Amersham is expected to enable this portfolio to be
developed more effectively. The Merger will also provide a
skills base and infrastructure which will make it possible
to address the emerging new market for molecular
diagnostics.
* Ultrasound technology
Nycomed's advanced ultrasound agent, NC100100, has completed
Phase II trials for major applications and is targeted for
FDA submission during 1998. The performance characteristics
and safety profile of NC100100 are expected both to help it
obtain regulatory approval and make it a competitive
product. This, together with its robust patent portfolio,
is expected to help Nycomed Amersham win a significant share
in the medium term of the emerging ultrasound market.
Forecasts for the size of the ultrasound contrast market
vary, but the Boards of Nycomed and Amersham believe the
market could reach #1 billion by 2005.
* Merger cost savings
The integration of Nycomed and Amersham is expected to yield
annual pre-tax cost savings of at least #40 million (NOK 485
million), of which up to half is expected to be realised by
31st December, 1998, with the full amount anticipated by
31st December, 2000. These savings are in addition to
savings expected from Nycomed's Focus 98 initiative and the
Amersham Pharmacia Biotech Merger. The savings are expected
to be achieved principally by the elimination of duplicate
infrastructure in imaging sales and marketing,
administration and corporate overheads.
An exceptional charge for the estimated #50 million (NOK 606
million) pre-tax cost of achieving these savings will be
made in Nycomed Amersham's accounts for the nine months to
31st December, 1997.
3. The Amersham Pharmacia Biotech Merger
On 10th June, 1997, Amersham announced that it had conditionally
agreed with Pharmacia & Upjohn, Inc. ("P&U") to merge Amersham
Life Science with Pharmacia Biotech, the Uppsala-based,
biotechnology supply business of P&U (the "Amersham Pharmacia
Biotech Merger"). The Merger will be conditional on completion
of the Amersham Pharmacia Biotech Merger, although Nycomed may
require Amersham to waive this condition.
Based on historic turnover, the Amersham Pharmacia Biotech Merger
would create the world's largest research-based biotechnology
supplier, with combined annual sales of approximately #430
million (NOK 4.4 billion), approximately 3,600 employees
worldwide and combined annual R&D investment of approximately #40
million (NOK 413 million).
Under the terms of the Amersham Pharmacia Biotech Merger,
Amersham and P&U will transfer their respective life science
businesses to a new company, Amersham Pharmacia Biotech Limited,
of which Amersham will own 55 per cent. of the equity and P&U 45
per cent.. Ron Long, currently Group Managing Director of
Amersham Life Science, will be the Chief Executive Officer of
Amersham Pharmacia Biotech. Bill Castell, currently Chief
Executive of Amersham, will be the Chairman of the Board of
Amersham Pharmacia Biotech.
The Amersham Pharmacia Biotech Merger is conditional on the
approval of Amersham's shareholders (at an Extraordinary General
Meeting to be held on 3rd July, 1997) and certain regulatory
consents. The Board of Amersham expects the Amersham Pharmacia
Biotech Merger to be completed towards the end of July 1997.
4. Financial effects of the Merger
The Boards of Nycomed and Amersham anticipate that the Merger
will enhance the Merged Group's earnings in the year to 3lst
December, 1998 and will significantly enhance the Merged Group's
earnings following realisation of the anticipated cost savings.
The Nycomed Special Dividend and the Mandatory Offer or
Compulsory Acquisition (see below) are expected, on the basis set
out in paragraph 5(b) below, to result in total cash payments out
of the Merged Group of approximately #140 million (NOK 1.7
billion). Following the Merger, the Boards of Nycomed and
Amersham expect that the Merged Group will continue to have a
strong financial position with a good interest cover.
It is intended that Nycomed Amersham will have a calendar year
end and the first results of Nycomed Amersham will be in respect
of the nine months to 3lst December, 1997. The published
accounts of Nycomed Amersham will be prepared in sterling and
Norwegian kroner in accordance with UK GAAP, with US GAAP
reconciliations.
Under current UK GAAP, existing goodwill carried in Nycomed's
consolidated balance sheet (which under Norwegian accounting
rules is amortised) will be written off, and the related
amortisation charge will no longer be incurred. As at 31st
December, 1996, Nycomed's consolidated balance sheet showed
goodwill of NOK 3.7 billion (#341 million) and goodwill
amortisation charged in Nycomed's consolidated profit and loss
account for the year ended 31st December, 1996 amounted to NOK
234 million (#23 million).
It is anticipated that the goodwill arising on the Merger will be
written off against the reserves of Nycomed Amersham, in
accordance with UK GAAP.
5. Principal terms of the Merger
The Merger will be effected by means of an all share offer (the
"Merger Offer"), to be made by Amersham (either itself or through
a Norwegian subsidiary) to acquire all the issued Nycomed voting
shares ("Nycomed A Shares") and Nycomed non-voting shares
("Nycomed B Shares") (together "Nycomed Shares").
The Merger Offer will be extended to Nycomed's shareholders in
the United States, and the new Nycomed Amersham shares issued
will be registered with the United States Securities and Exchange
Commission.
It is intended that Nycomed Amersham will have listings on the
London, Oslo, New York and Copenhagen Stock Exchanges.
(a) The Merger Offer
The Merger Offer, which will be subject to the conditions and
further terms set out in Appendix I, will be made on the
following basis:
For each Nycomed A 0.6506 Nycomed Amersham Ordinary
Share Shares
For each Nycomed B 0.6506 Nycomed Amersham Non-
Share voting Shares
and so in proportion for any greater number of Nycomed Shares
held.
Fractional entitlements to new Nycomed Amersham Ordinary Shares
and Nycomed Amersham Non-voting Shares will be aggregated and
sold in the market and the net proceeds distributed pro rata to
Nycomed shareholders entitled thereto, save that individual
amounts of less than #3 (NOK 36) will be retained for the benefit
of the Merged Group.
The Nycomed Amersham Ordinary Shares to be issued under the
Merger Offer will rank pari passu with the existing Amersham
Ordinary Shares, save that the new Nycomed Amersham Ordinary
Shares will not rank for the final dividend proposed by the Board
of Amersham in respect of the year to 31st March, 1997.
The Nycomed Amersham Non-voting Shares to be issued under the
Merger Offer will rank pari passu with the Nycomed Amersham
Ordinary Shares, except that each Nycomed Amersham Non-voting
Share will not carry the right to vote at general meetings of
Nycomed Amersham.
As at 27th June, 1997, there were in issue approximately 59.1
million Amersham Ordinary Shares, 60.6 million Nycomed A Shares
and 41.9 million Nycomed B Shares. The closing price of these
securities on 27th June, 1997 was 1,592.5p (NOK193), NOK106.5
(878p) and NOK103.5 (853p) respectively. Following the Merger,
there will be approximately 98.6 million Nycomed Amersham
Ordinary Shares and approximately 27.2 million Nycomed Amersham
Non-voting Shares in issue, assuming that the Merger Offer is
accepted in full by all holders of Nycomed Shares.
(b) The Mandatory Offer
If the Merger Offer becomes or is declared unconditional in all
respects, Amersham will be required to make a cash offer (the
"Mandatory Offer") for the remaining Nycomed Shares not already
acquired.
The price per Nycomed Share under the Mandatory Offer is likely
to be the value of the consideration per Nycomed Share under the
Merger Offer on the dealing day immediately prior to the day on
which the Merger Offer becomes or is declared unconditional or,
if Amersham acquires Nycomed Shares at a higher price before or
during the Mandatory Offer, that higher price.
In addition, if Amersham acquires Nycomed Shares representing
more than 90 per cent. of the Nycomed voting rights and more than
90 per cent. of the Nycomed Shares, Amersham will become entitled
(and may be required) to acquire the remaining Nycomed Shares for
cash (on terms agreed with each shareholder or, failing
agreement, determined by the Norwegian courts) (the "Compulsory
Acquisition").
Based on the closing price of Amersham Ordinary Shares on 27th
June, 1997, the cash required to acquire 10 per cent. of the
Nycomed Shares under the Mandatory Offer or the Compulsory
Acquisition (assuming the Norwegian courts confirmed the
Mandatory Offer price as the Compulsory Acquisition price) would
be approximately #90 million (NOK 1.1 billion).
6. Summary financial information
Summary financial information on Nycomed, Amersham and Pharmacia
Biotech is set out in Appendices IV, V and VI. The information
in relation to Nycomed and Amersham has been extracted from the
Nycomed audited accounts for the year ended 31st December, 1996
and the Amersham audited accounts for the year ended 31st March,
1997 respectively. The information on Pharmacia Biotech has been
extracted from the accountants report published in Amersham's
circular to its shareholders dated 16th June, 1997 in connection
with the Amersham Pharmacia Biotech Merger.
Appendix VII contains abbreviated, illustrative pro forma
financial information on Nycomed Amersham, which assumes, inter
alia, that the Amersham Pharmacia Biotech Merger and the Merger
have been completed.
7. Dividend payments
(a) Amersham shareholders
As a result of the proposed change of Amersham's financial year
end to 31st December, following completion of the Merger, there
will be no interim dividend for Amersham shareholders in respect
of the six months to 30th September, 1997 and the next dividend
payment to shareholders will be a final dividend in respect of
the nine months to 31st December, 1997, which is expected to be
announced in March 1998. Thereafter, shareholders will receive
dividends twice annually, in November following the Merged
Group's interim results and in June following the Merged Group's
full year results.
(b) Nycomed shareholders
Nycomed shareholders of record shortly before the Merger Offer
becomes unconditional will qualify for a special dividend of NOK
5.62 (46p) per share (the "Nycomed Special Dividend"), to be paid
by Nycomed as soon as reasonably practicable following completion
of the Merger. Payment of this dividend will require the
approval of Nycomed's shareholders at a general meeting. Nycomed
has been advised that the Nycomed Special Dividend will reduce
the base cost of Nycomed shares for Nycomed shareholders for
Norwegian tax purposes (the "RISK" adjustment).
Thereafter, Nycomed shareholders will rank alongside Amersham
shareholders in respect of the payment of dividends and will
receive the final dividend of the Merged Group in respect of the
nine months to 31st December, 1997, which is expected to be
announced in March 1998.
It is intended that shareholders whose shares are registered in
the Norwegian book entry clearing system - VPS - will receive
their dividends in Norwegian kroner.
8. Board, management and employees
(a) Board of Directors and senior management
The Board of Nycomed Amersham will comprise six executive
directors and eight non-executive directors, of which three
executive and four non-executive directors will be nominated by
the existing Boards of each of Nycomed and Amersham.
In addition, Nycomed, consistent with current Norwegian practice,
and Amersham will each be entitled to appoint one employee
representative director to the Board.
The Board of Nycomed Amersham will, following implementation of
the proposed Merger, include the following:
Johan Non-executive Chairman
Fredrik
Odfjell
Richard Non-executive Deputy Chairman
Lapthorne
Bill Group Chief Executive Officer
Castell
Svein Aaser Group Deputy Chief Executive Officer;
Chairman, Pharmaceuticals
Ron Long Chief Executive, Amersham Pharmacia
Biotech
Trond Chief Executive, Pharmaceuticals
Jacobsen
Andrew Finance Director
Allner
Trond Corporate Development Director
Berger
The additional non-executive directors (other than the employee
representatives) will be drawn equally from the existing Boards
of Nycomed and Amersham.
(b) Employees
As at 31st December, 1996, Nycomed had approximately 5,600
employees. The average number of employees for Amersham and
Pharmacia Biotech was 3,487 and 2,502 for the years ended 31st
March, 1997 and 31st December, 1996, respectively.
Nycomed and Amersham will inform and fully consult relevant
employee organisations regarding the social, economic and legal
consequences of the Merger in accordance with applicable legal
requirements.
9. Timetable and other matters
It is expected that the formal Merger Offer documents will be
posted to Nycomed shareholders by the beginning of September 1997
and that the Merger Offer will be open for at least 20 business
days thereafter. The consideration due under the Merger Offer
will be sent to accepting Nycomed shareholders as soon as
reasonably practicable after the Merger Offer becomes or is
declared unconditional in all respects.
An extraordinary general meeting of Amersham shareholders to
approve the Merger is expected to be held towards the end of
September 1997. A circular and listing particulars are expected
to be posted to Amersham shareholders by the beginning of
September.
Nycomed is being advised by Goldman Sachs International ("Goldman
Sachs") and Sundal Collier & Co. a.s ("Sundal Collier").
Amersham is being advised by Morgan Stanley & Co. Limited
("Morgan Stanley") and Morgan Grenfell & Co. Limited ("Deutsche
Morgan Grenfell"). Hoare Govett Corporate Finance Limited are
brokers to Amersham.
Deutsche Bank AG London and Citibank, N.A. have agreed in
principle to provide fully underwritten credit facilities in
connection with the Merger and the Amersham Pharmacia Biotech
Merger.
Enquiries:
Nycomed Svein Aaser 00 47 23 18 50 50
Eric Cameron 00 47 23 18 50 50
Trond Berger 00 47 23 18 50 50
Goldman Sachs Richard Campbell- 0171 774 1000
Breeden 0171 774 1000
Berent Wallendahl
Sundal Collier Jan Petter Collier 00 47 22 01 6000
Are Andersen 00 47 22 01 6000
Finsbury Rupert Younger 0171 251 3801
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Amersham Bill Castell 01494 544 000
Andrew Allner 01494 544 000
Giles Kerr 01494 544 000
Morgan Stanley Michael Tory 0171 425 5555
Mark Perrett 0171 425 5555
Deutsche Morgan Mark Preston 0171 545 8000
Grenfell Philip Mastriforte 0171 545 8000
Brunswick Alan Parker 0171 404 5959
Conference notes
The following meetings for investors, stockbrokers' analysts and
the press are being held today:
London
10.00a.m. Analysts presentation
11.45a.m. Press conference
Location: The Sugar Rooms, The Brewery, Chiswell
Street, London EC1
Oslo
09.30a.m. Press conference
11.00a.m. Analysts conference
Location: Nycoveien 2, Oslo
The following foreign exchange rates have been used in this
document:
(a) #1 : NOK 10.082 and #1 : NOK 10.926, respectively the
average and year end rates for the year to 31st December,
1996, to translate respectively Nycomed profit and loss
information and Nycomed balance sheet information into
sterling;
(b) #1 : SEK 10.474 and #1 : SEK 11.685, respectively the
average and year end rates for the year to 31st December,
1996, to translate respectively Pharmacia Biotech profit and
loss information and Pharmacia Biotech balance sheet
information into sterling;
(c) #1 : NOK 10.324 and #1 : NOK 10.834, respectively the
average and year end rates for the year to 31st March, 1997,
to translate respectively:
(i) Amersham profit and loss information and balance sheet
information into Norwegian kroner;
(ii) Amersham Pharmacia Biotech pro forma profit and loss
information and balance sheet information into
Norwegian kroner;
(d) the same rates as in (a) to translate Nycomed Amersham pro
forma profit and loss information and balance sheet
information into Norwegian kroner;
(e) #1 : NOK 12.129, the rate prevailing on 27th June, 1997,
being the last practicable date prior to the date of this
announcement, for all other information.
The contents of this announcement have been approved by Morgan
Stanley and Deutsche Morgan Grenfell solely for the purposes of
Section 57 of the Financial Services Act 1986.
No offer or invitation to acquire securities in Amersham is being
made now nor are offers being solicited. Any such offer or
invitation will only be made in an offer document to be published
in due course and any such acquisitions should be made solely on
the basis of information contained in such offer document.
Goldman Sachs, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, and Sundal Collier are
acting for Nycomed and no one else in connection with the Merger
and will not be responsible to anyone other than Nycomed for
providing the protections afforded to customers of Goldman Sachs
and Sundal Collier respectively, nor for providing advice in
relation to the Merger.
Morgan Stanley and Deutsche Morgan Grenfell, which are both
regulated in the United Kingdom by The Securities and Futures
Authority Limited, are acting for Amersham and no one else in
connection with the Merger and will not be responsible to anyone
other than Amersham for providing the protections afforded to
customers of Morgan Stanley and Deutsche Morgan Grenfell
respectively, nor for providing advice in relation to the Merger.
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