Mystery suitor for Amersham

MEDICAL technology group Amersham has begun talks with a mystery suitor, sending shares in the £4bn-rated company soaring today.

Amersham's stock led the FTSE 100 risers, jumping by 25% to a year's high of 688p or a gain of 136 1/2p, after the firm responded to an early rise in its price by confirming that it had received a bid approach 'which may or may not lead to an offer'.

Today's price rise increases Amersham's value by almost £1bn, as investors speculated that a bidding war could top £5bn for one of Britain's most successful State privatisations.

The firm, along with Shire, is one of only two British blue-chips in the medical diagnostics and healthcare sectors, and has grown consistently since 1980, when it became the first of a wave of Thatcherite State privatisations in that decade.

Amersham, headed by chief executive Sir William Castell, has a portfolio of equipment to research and manufacture drugs, but specialises in image enhancing agents for x-rays and body scanners.

It also makes dyes such as Vispaque to improve medical scans and diagnostic equipment for cancer, heart disease and Alzheimer's. Last year sales topped £1.53bn with chunky margins lifting profits to a record £263.7m. This year pre-tax profits are expected to be close to £300m on sales up close to a third.

Amersham earns 75% of its turnover in the world's biggest health market, the US, with a large proportion in Japan and the remainder in Europe. This year it took a £29m hit because of the weakness of the US dollar and problems with the yen.

It also suffered a one-off charge of £50m on shedding 400 jobs in its laboratory equipment division. However, Amersham has few competitors and despite the slowdown in international research spending, its life sciences business has stood up well during the year.

Sound vision at the top

FOR a boss of a healthcare business, Sir William Castell suffers from an unusually long list of ailments - low birthweight, ulcer, bad back, kidney stones and high cholesterol. Yet few obstacles, medical or business-related, have been allowed to get in the way of Amersham's growth over the past decade.

Long-term strategic vision and a keen eye for deals have made Amersham one of the world's biggest medical diagnostics groups.

Castell, who joined Amersham in 1989, realised quickly that its expertise in nuclear medicine gave it a perfect opportunity to benefit from long-term trends, for example the rise in age-related diseases such as Alzheimer's. In the mid-1990s he took the bold step to merge with Norway's Nycomed, propelling the group to blue-chip status.

Bid battle likely for Footsie gem

THERE is no shortage of likely suitors for Amersham International and any formal offer could spark a bidding war.

With almost three-quarters of its business from the US, the most obvious bidder for the group is likely to American with an ambition to increase its exposure to the life sciences industry.

The list of possible candidates is likely to include Du Pont, Johnson & Johnson, Abbott Laboratories, Bracco and even industrial giant Tyco, which owns a rival to Amersham. In Europe, the list could feature the Swiss pharmaceuticals giant Roche.

Amersham, a component of the FTSE 100 with a £4bn market value, is involved in some of the hottest areas of medical science, such as biotechnology and gene research.

Under Castell, the group has established an impressive long-term growth record. It is one of the world's leading providers of materials vital to diagnosing life-threatening diseases such as cancer. These materials are used in X-rays and body scanners for highlighting organs such as the heart, lungs and kidneys.

Amersham has also positioned itself to be a major supplier of key ingredients for the newly-developed drugs that are likely to go on sale within the next year. These include cancer drugs Velcade and Avastin, produced by US biotech groups. There are high hopes in the industry that these will be blockbuster drugs, further boosting demand for Amersham's products.