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EXHIBIT 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT:
Jackie Cossmon
Catalytica, Inc.
(650) 960-3000, ext. 6204
CATALYTICA TO SELL PHARMACEUTICAL OPERATIONS TO DSM
AND SPIN-OFF REMAINING BUSINESSES TO STOCKHOLDERS
MOUNTAIN VIEW, CA (August 2, 2000) -- Catalytica, Inc. (Nasdaq: CTAL) and
DSM announced today that DSM will acquire Catalytica's pharmaceuticals business
through the purchase of Catalytica, Inc. for approximately $750 million plus the
assumption of debt, for a total current value of approximately $800 million.
The transaction is structured as a merger of a wholly-owned U.S. subsidiary of
DSM with Catalytica and a taxable spin-off of the Catalytica Combustion Systems
and Catalytica Advanced Technologies businesses as a single entity to Catalytica
stockholders. As a result, Catalytica will operate as a subsidiary of DSM and
the Catalytica Combustion Systems and Catalytica Advanced Technologies
businesses will comprise a stand-alone company to be called Catalytica
Combustion Systems. Shares of the spin-off company will be distributed one day
prior to the effectiveness of the merger.
In addition to distribution of Catalytica Combustion Systems, stockholders
of Catalytica will receive proceeds from the sale of Catalytica, subject to
certain adjustments. Among the adjustments is the tax liability incurred by
Catalytica with respect to the spin-off. The merger is subject to customary
closing conditions, including the approval of Catalytica stockholders and
expiration or termination of the waiting period under the Hart-Scott Rodino
Antitrust Improvements Act. The parties expect the transaction to be completed
in the fourth quarter of 2000.
"This transaction brings value to our stockholders for our pharmaceuticals
business and will also enable us to bring them a new and separate entity focused
in the energy technology sector," stated Ricardo Levy, president and CEO of
Catalytica, Inc. "With dynamic changes happening in the power generation
market, we believe the Xonon Cool Combustion technology with its near zero
pollution solution is well positioned to address the needs of this rapidly
growing market."
Craig Kitchen, recently appointed president and CEO of Catalytica
Combustion Systems, will remain president and CEO of the newly created public
entity. Ricardo Levy, will become chairman of the board of directors of
Catalytica Combustion Systems, Inc.
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The newly created division within DSM will be named DSM Catalytica
Pharmaceuticals. Michael Thomas, current president and CEO of Catalytica
Pharmaceuticals, will head the North American operations of DSM Catalytica
Pharmaceuticals.
Peter Elverding, chairman of the DSM Managing Board stated, "Through this
acquisition, DSM gains a major geographic presence in the United States and thus
enhances its worldwide leadership in the industry. Catalytica is a high quality
supplier that has several unique capabilities to serve this dynamic market. In
particular, Catalytica's state-of-the-art sterile facility and strong
formulation development capabilities will be a powerful complement to our
manufacturing."
Ricardo Levy also commented on the acquisition, "The combined company will
have the critical mass and capabilities to streamline all of the operations in
the pharmaceutical production cycle and provide excellent added value to its
pharmaceutical customers. The combined entity, which will have a broader
customer base and an international presence, should enable a smoother transition
for Catalytica as the Glaxo products from the original supply agreement
transition out of the Greenville facility."
On learning of the transaction, Robert A. Ingram, chief executive of Glaxo
Wellcome, plc said, "This transaction brings together two very reputable players
in the outsourcing market and provides a combination of capabilities that will
serve well the pharmaceutical industry and customers like Glaxo Wellcome."
The cash proceeds to the stockholders of Catalytica from this transaction
are subject to certain adjustments, including a reduction in proceeds for the
tax liability incurred by Catalytica with respect to the spin-off. The tax
liability, which is expected to be a material amount, will be based on the value
of Catalytica Combustion Systems as determined by the weighted average trading
price of the spin-off company on the first full day of trading. In addition,
the cash proceeds will be reduced by contributions by Catalytica to Catalytica
Combustion Systems to provide the company with adequate operating capital, which
are currently expected to be approximately $40 - $50 million. These reductions
are expected to be partially offset by proceeds from the exercise of options and
warrants to purchase Catalytica common stock prior to the merger.
Catalytica estimates that the cash proceeds to stockholders may be in the
range of $9.00 - $10.00 per share but could be significantly higher or lower
depending upon the tax liability that Catalytica incurs for the spin-off of
Catalytica Combustion Systems. Catalytica currently owns 85% of Catalytica
Combustion Systems, of which all shares will be distributed ratably to
Catalytica stockholders. Catalytica stockholders will be required to pay taxes
on the net gain of proceeds from this transaction.
Options to purchase Catalytica stock will not be assumed by DSM. All
unexercisable options shall become exercisable in connection with the merger,
but will be cancelled and terminated upon the effectiveness of the merger.
Catalytica was advised by Morgan Stanley & Co. Incorporated and Credit
Suisse First Boston Corporation in this transaction.
Morgan Stanley Capital Partners III, L.P. and certain affiliates of
Catalytica own approximately 32% of the voting stock of Catalytica, and have
signed agreements to vote in favor of this transaction.
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Catalytica has agreed to pay a fee of $20 million plus up to $5 million in
expenses to DSM under certain circumstances, including the termination of the
agreement to enter into an agreement in connection with another offer to
purchase the company.
Catalytica, Inc. has scheduled a conference call to be held on Thursday,
August 3, 2000 at 9:30 AM (PDT). This call will be accessible live via the
internet at http://www.catalytica-inc.com or via telephone at 1-888-850-2534
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(719-457-2633 for international callers). A replay of the call will also be
available via the internet or via telephone 24 hours / day for 72 hours
beginning at 12:30 PM (PDT) on August 3, 2000 and ending at 12:00 AM (PDT) on
August 7, 2000. To connect to the replay via telephone, simply dial 1-888-203-
1112 (719-457-0820 for international callers), reference pass code 921731.
DSM (www.DSM.nl) is a highly integrated international group of companies
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headquartered in Heerlen, the Netherlands that is active worldwide in the field
of life science products, performance materials and chemicals. The group has
annual sales of EUR 6.3 billion ($5.9 billion USD) and employs about 21,800
people at more than 200 sites worldwide.
Catalytica, Inc. (www.Catalytica-inc.com) finds new pathways to improve
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processes--reducing time, waste, and costs. It operates through its
subsidiaries: Catalytica Pharmaceuticals, Catalytica Combustion Systems, and
Catalytica Advanced Technologies. Catalytica Pharmaceuticals applies innovative
and patented catalytic technologies and other chemical processes to improve the
steps for manufacturing pharmaceuticals and finds better and more efficient ways
to produce products in commercial scale quantities; Catalytica Combustion
Systems' unique Xonon Cool Combustion technology enables gas turbines to produce
essentially pollution-free power; Catalytica Advanced Technologies serves as the
incubator for new catalytic technologies for industrial applications.
This press release contains "forward-looking statements" (as defined under
federal securities law) regarding the spin-off and the planned merger of DSM and
Catalytica. The actual events, including the ability of the companies to obtain
the approval of Catalytica's stockholders, to close the spin-off and the merger
transaction, may differ materially and adversely from those discussed in this
press release. Factors that may cause such a difference include, without
limitation, inability to obtain Catalytica stockholder approval of the
transaction, failure to satisfy the closing conditions set forth in the merger
agreement, potential litigation, and other risks associated with acquisitions.
There can be no assurance that the spin-off and the merger will be completed on
the intended schedule. For additional information about factors that could
affect the business of Catalytica, see the documents filed by Catalytica with
the United States Securities and Exchange Commission.
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