Amersham buys out Biosciences

BIOTECH group Amersham is to buy out the remaining 45% in Amersham Biosciences from US-owned Pharmacia Corporation for £704m in cash. The long-predicted move will give Amersham complete control of the research group.

At one time it was planning to float 10% of its existing 55% stake. However, chief executive Sir William Castell said last month that such a float was 'unlikely'. Market conditions for initial public offerings, particularly in the biotech sector, have been difficult in the past year. Amersham's share price fell 31 1/2p to 705p.

Integrating Amersham's biosciences division with Amersham Biosciences will lead to important benefits for the British group. Analyst Navid Malik at Williams de Broe said: 'Use of antibodies will be phenomenally important in the future.'

While the healthcare side of Amersham is producing strong results, especially now it has settled a long-running and costly legal row over patents, the life sciences business has been disappointing. Castell said: 'This will enhance our ability to create value from the emerging possibilities in personal medicine. The simplified structure will increase our flexibility and speed of decision-making, which is the key to success in today's fast-changing market environment.'

Amersham will fund the purchase by placing 50m new shares at a price still to be decided. Its brokers Hoare Govett and Morgan Stanley have been granted the right to purchase 7.5m shares under an over allotment option. Amersham will also use cash and bank facilities. Its debt at the end of its last financial year was £25m. The deal is expected to be earnings neutral until 2003 and beneficial after that.

In 2001 Amersham Biosciences generated sales of £681m and operating profits before exceptionals of £72m. At the year-end net debt was £240m and assets were worth £120m.

Amersham was the first privatisation to be carried out by Margaret Thatcher's Conservative Government 20 years ago. It has annual sales of £1.6bn and employs 9,000 worldwide. Last month it said that in the year to last December its sales grew by 13% to £1.6bn with earnings up 9% to £279m. Dividends rose by 11% to 7.1p.