Fisons chiefs could net £3m in merger

Seven executive directors at Fisons, the pharmaceutical company, stand to share a personal pay-off of almost £3m should they leave as part of the proposed deal with the rival pharmaceutical group Medeva.

Fisons confirmed yesterday that it was talking to Medeva about a possible agreed takeover, which analysts suggested could value the group at around £900m.

Medeva's shares rocketed 31p to 257.5p on the first day's trading since the news broke, while Fisons' sank 4p to 174p.

Although Fisons is the larger of the two companies, it is likely that the Medeva management would take on the larger role in running the combined business.

Dennis Millard, the Medeva finance director, said yesterday: "At this stage, it is premature to comment on who takes which positions. The managment required to take the business forward will be the best from both organisations."

But he added: "Medeva's management is well regarded. That's an asset that Fisons perceives that Medeva has.'

Under the terms of their contracts, Fisons' directors would be entitled to between one and a half and two times their annual salary if they left following a change of control at the company.

With salaries for executive directors ranging from £147,504 to the £280,000 paid to Stuart Wallis, the chief executive, the total pay-off for loss of office could reach £1.7m for the six UK-based directors. In addition Maurice Cocca, managing director of Fison's US Laboratory Supplies Division, is entitled to 12 months' notice. He earns $425,000 (£266,000), bringing the total pay-off for the board to £1.98m.

The directors also stand to make over £1m profits from share options, bringing the potential pay-off pot to nearly £3m.

The biggest winner would be Mr Wallis, whose £280,000 basic salary means he would be entitled to a £360,000 pay-off.

He also has 888,000 share options, granted last October at a price of 126p. At yesterday's closing price of 174p, his options are currently showing a paper profit of over £420,000.

Speculation that Medeva was looking for a minimum offer of £3 a share was dismissed by both sides yesterday. Mr Wallis said: "That is certainly not a figure I have even contemplated or ascribed to and I don't think Medeva has either, so it is pure speculation at this stage."

The talks, which began in January about possible asset swaps, developed into full-scale merger talks recently.

A spokeswoman for Fisons said it was speculation that any deal would result in the departure of Fisons directors. She said talks were at an early stage and a deal might not emerge.

"The share price has gone up dramatically since Mr Wallis took over as chief executive," she said.

Mr Wallis joined the company last September. The share price hit a low of 107p in early October.

Comment, page 29

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