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CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
CAMDEN INDUSTRIAL PARK
1111 SOUTH PACA STREET
BALTIMORE, MARYLAND 21230-2591
November 17, 2000
Dear Stockholder:
I am pleased to inform you that Chesapeake Biological Laboratories entered
into a merger agreement with AC Acquisition Subsidiary, Inc. and Cangene
Corporation providing for the commencement of a tender offer to purchase all
outstanding shares of Chesapeake Biological Laboratories' (a) class A common
stock for $4.60 per share in cash, (b) series A-1 preferred stock for $4.60 per
share in cash, multiplied by the number of shares of common stock into which the
preferred stock is then convertible and (c) warrants to purchase common stock
for $4.60 per share, in cash, multiplied by the number of shares of common stock
for which the warrants are then exercisable, net of the exercise price, by AC
Acquisition Subsidiary, Inc., a Maryland corporation and a wholly-owned
subsidiary of Cangene Corporation, a Canadian corporation. The tender offer will
only close if, among other things, a minimum of a majority of Chesapeake
Biological Laboratories' shares are tendered and not withdrawn (treating the
Series A-1 convertible preferred stock as converted), we receive required
regulatory approvals and the loan commitment to Corporation by The Bank of Novia
Scotia has not been withdrawn. If Cangene Corporation completes the tender
offer, Chesapeake Biological Laboratories will merge with AC Acquisition
Subsidiary and each share of Chesapeake Biological Laboratories, class A common
stock not purchased in the tender offer will be converted into the right to
receive $4.60 in cash.
THE CHESAPEAKE BIOLOGICAL LABORATORIES BOARD OF DIRECTORS HAS DETERMINED
THAT THE TERMS OF THE CANGENE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST
INTERESTS OF THE CHESAPEAKE BIOLOGICAL LABORATORIES STOCKHOLDERS AND RECOMMENDS
YOU ACCEPT THE OFFER AND TENDER YOUR SHARES OF CHESAPEAKE BIOLOGICAL
LABORATORIES CLASS A COMMON STOCK.
In arriving at its recommendation, the board of directors considered a
number of factors, as described in the attached Schedule 14D-9, including the
opinion of Chesapeake Biological Laboratories' financial advisor, Arnhold and S.
Bleichroeder, Inc., that, as of the date of the opinion, the $4.60 offered for
each share of Chesapeake Biological Laboratories common stock is fair to the
Chesapeake Biological Laboratories stockholders from a financial point of view.
A copy of the Arnhold and S. Bleichroeder opinion is attached as Annex A.
Enclosed are AC Acquisition Subsidiary's Offer to Purchase on Schedule TO,
dated November 17, 2000 and the related Letter of Transmittal. These documents
describe the terms and conditions of the tender offer. The Schedule 14D-9
describes in more detail the reasons for the Chesapeake Biological Laboratories
board of directors' conclusions and contains other information relating to the
tender offer. Please consider this information carefully.
/s/ Thomas P. Rice
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Thomas P. Rice
President and Chief Executive Officer
