CEPHALON OFFERS 70c A SHARE FOR CHEMGENEX
March 29th 2011 21:17
Tuesday March 29, 2011
Daily news on ASX-listed biotechnology companies
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CHEMGENEX PHARMACEUTICALS
Chemgenex says that Cephalon has taken 27.57 percent of the company and has unanimous board support for its 70 cents a share takeover offer.
In a joint media release the companies said the offer valued Chemgenex at $225 million.
The offer is well below expectations that were as high as $5.50 in February 2007, falling to $2.90 in December 2010 (BD: Feb 22, 2007; Dec 6, 2010).
In 2008 Chemgenex raised $13 million at 85 cents a share, with investors including major shareholders Alta Partners, GBS Venture Partners and Marck Santé (BD: Sep 17, 2008).
In 2009, Chemgenex raised $18.4 million at 43 cents a share (BD: Apr 9, May 27, 2009).
Chemgenex said its directors “unanimously recommend the bid, in the absence of a superior offer”.
Chemgenex said it was a haematology-focused company developing Omapro for the treatment of chronic myeloid leukemia patients, with completed phase III clinical trials and a planned new drug application to be filed with the US Food and Drug Administration by the end of 2011.
Chemgenex said the agreements with Cephalon included a review of trial data prior to exercising its option to acquire 19.9 percent of Chemgenex from major shareholders Stragen International NV and Merck Santé SAS.
The companies said the takeover bid comprised two offers: 70 cents for each Chemgenex share and two cents each for ASX-listed Chemgenex options exercisable at 68 cents by February 8, 2012.
Chemgenex said that subject US legal requirements, Cephalon would consider extending the offer to holders of Chemgenex American depository receipts, if compliance was not unduly onerous or impracticable.
Chemgenex said the 70 cents a share offer was a 59 percent premium to the last traded price of Chemgenex Shares and a 58 percent premium to the one month volume weighted average price, as well as a 31 percent premium to the mid-point of the valuation range of 46 cents to 61 cents on a controlling interest basis assessed by BDO Corporate Finance in its independent expert’s report of November 15, 2010, sent to Chemgenex shareholders in connection with the meeting material seeking their approval of the conversion of the convertible notes issued to Cephalon International.
Cephalon chief executive officer Kevin Buchi said the proposed transaction allowed Chemgenex shareholders “to realize cash proceeds at a significant premium to recent trading levels and adds an interesting late-stage opportunity to our portfolio”.
Chemgenex chairman Brett Heading said the board welcomed the bid which was “an attractive premium to the current and recent trading prices of Chemgenex shares”.
Chemgenex said the takeover offers for shares and listed options would be subject to certain normal conditions, including a 90 percent minimum acceptance condition.
Chemgenex said that each director with personal holdings had confirmed the intention to accept or procure the acceptance of the offers, in the absence of a superior offer.
The company said that the total offer value for Chemgenex shares and listed options that Cephalon did not own was about $159 million and the offer valued all Chemgenex shares and options at about $225 million.
Cephalon said it would fund the transaction consideration from its available cash on hand.
Cephalon said it would finalize and mail its bidder’s statement and Chemgenex would finalize and mail its target’s statement as soon as practicable.
Chemgenex chief operating officer James Campbell told Biotech Daily that the closing date for the offer was dependent on the completion of formal documentation.
Chemgenex closed up 23.5 cents or 53.4 percent to 67.5 cents with 13.6 million shares traded.
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