Licensing 'poison pill' likely to seal £1.5bn Belgian bid for Celltech

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The Independent Online

Celltech, Britain's oldest and biggest biotechnology company, is being taken over by a Belgian pharmaceuticals group in a deal worth £1.53bn.

Celltech, Britain's oldest and biggest biotechnology company, is being taken over by a Belgian pharmaceuticals group in a deal worth £1.53bn.

The cash offer from UCB, which is headquartered in Brussels, emerged during talks to license Celltech's most advanced new drug, a treatment for rheumatoid arthritis codenamed CDP870. The two companies also said yesterday that UCB was buying the rights to CDP 870, making a rival offer for Celltech highly unlikely.

The agreed takeover is pitched at 550p, a 28 per cent premium to the Celltech share price on Monday night. The stock closed yesterday up 111.5p at 542p.

The deal robs the UK biotech industry of what many had hoped would become a national champion in a sector that is yet to achieve the critical mass or commercial success enjoyed in the US. UCB said Celltech's research operations in Slough would be largely unaffected by the planned €100m cost saving programme, and held out the prospect of moving its primary stock market listing to London - although it stressed there were no current plans to do so.

UCB's chief executive, Roch Doliveux, said the market for CDP870 was worth $5bn a year and was still growing at 50 per cent a year, making it a highly attractive product. Goran Ando, Celltech's chief executive, is to become Mr Doliveux's deputy.

The agreed takeover is the culmination of a process that began last year when Pfizer, Celltech's previous partner in the development of CDP870, handed back rights to the product.

Celltech gave few financial details of the licensing agreement with UCB, which gives the Belgian company the worldwide rights to CDP870 in rheumatoid arthritis, in return for which UCB will bankroll the remaining clinical trials and regulatory approval process and pay royalties to Celltech.

Although some analysts described the licensing deal as a poison pill that would prevent the emergence of other bidders, Celltech said there was "no toxic intent". A deal now allows UCB to ready the remaining trials, while a delay could mean CDP870 misses its planned 2007 launch date.

Peter Allen, Celltech's finance director, said. "Celltech's valuation is so dependent on CDP870 that if we had not signed the licensing deal and something had gone wrong with the takeover talks we would have been hung out to dry. Also, we have in effect been on the acquisition pedestal for six months now and believe we have flushed out all the interest that there is in CDP870."

Another drug group in talks over CDP870 had also indicated it was considering an offer, but no formal bid emerged.

The takeover will bring down the curtain on the UK's oldest biotech company, which was set up in 1980 by the state-owned National Enterprise Board, with a brief to commercialise life sciences research from universities and public bodies.

The company was floated in 1993 and was transformed later in the decade by the merger with Chiroscience and acquisition of Medeva, which brought in a portfolio of branded drugs, including cough medicines, with which to fund further research and development work. It was briefly an FTSE 100 company.

Andy Smith, the manager of the 3i Biosciences investment trust, said the takeover was the best deal for shareholders. "If Celltech had just announced a licensing deal with UCB today, their shares would have been down 30 per cent, not up. They said they wanted a partner with biologics experience, but I don't believe UCB has that. They said they wanted someone with a rheumatology sales force, but UCB doesn't have that, either."