11 December 2000
MERGER OF SHIRE PHARMACEUTICALS GROUP PLC
WITH BIOCHEM PHARMA INC TO FORM A LEADING GLOBAL
SPECIALTY PHARMACEUTICAL COMPANY
ANDOVER, UK and LAVAL, CANADA - 11 December 2000 - Shire Pharmaceuticals Group
plc (LSE: SHP.L; NASDAQ: SHPGY) ("Shire") and BioChem Pharma Inc. (TSE: BCH;
NASDAQ: BCHE) ("BioChem") announced today that they have entered into an
agreement to merge the two groups to form a leading global specialty
pharmaceutical company. The Merger will be achieved through an exchange of
shares, which values, on the basis of the current price of Shire ADSs, each
BioChem Share at US$37 (C$54.4) and BioChem at approximately US$4.0 billion
(C$5.9 billion) on a fully diluted basis.
Transaction highlights
The Merger:
o creates one of the world's leading global specialty pharmaceutical
companies;
o broadens and enhances the product portfolio, with leading positions in
ADHD and HIV, and deepens the project pipeline, with BioChem's early
stage projects complementing those at a later stage in Shire;
o brings together complementary strengths of the merger partners,
providing exciting future opportunities to market BioChem's
development-stage projects through Shire's direct sales
infrastructure;
o generates strong cashflow for reinvestment in the enlarged group's
search and development strategy and, with opportunities for synergies,
is expected to be accretive to Shire's earnings in the first full
year; and
o creates an enlarged group which would have had combined unaudited pro
forma revenues for the year ended 31 December 1999 of US$587 million.
Shire is an international specialty pharmaceutical company with a strategic
focus on four therapeutic areas: central nervous system disorders, metabolic
diseases, oncology and gastroenterology. The group has a sales and marketing
infrastructure with a broad portfolio of products, with its own direct marketing
capability in the US, Canada, UK, Republic of Ireland, France, Germany, Italy
and Spain and with plans to add Japan by 2004. Shire also covers other
significant pharmaceutical markets indirectly through distributors and sales
coverage continues to grow.
<PAGE>
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BioChem is an international specialty pharmaceutical company dedicated to the
development and commercialisation of innovative products for the prevention and
treatment of human diseases, with a focus on infectious diseases and cancer.
BioChem's first therapeutic product, 3TC/Epivir, has become the cornerstone of
HIV infection/AIDS combination therapies, most recently being launched as part
of GlaxoWellcome's Trizivir therapy. A second therapeutic product, Zeffix, an
oral treatment for chronic hepatitis B, is currently being introduced in key
markets worldwide by GlaxoWellcome, BioChem's partner for the development and
commercialisation of both 3TC/Epivir and Zeffix.
It is anticipated that Dr Francesco Bellini, the Honourable James A. Grant and
Gerard Veilleux will join the board of the enlarged company in non-executive
capacities with effect from Closing. Dr James Cavanaugh will remain as Chairman
of the enlarged company and Mr Stahel, Mr Russell and Dr Totten will continue
their capacities within the enlarged company as Chief Executive, Group Finance
Director and Group R&D Director respectively.
BioChem Shareholders will be entitled to receive new Shire Shares or new Shire
ADSs in exchange for their BioChem Shares, with an exchange ratio based on the
average closing price of a Shire ADS during the last fifteen trading days ending
on the third trading day prior to the Closing. BioChem Shareholders resident in
Canada will be entitled to elect for Shire Exchangeco Shares instead of Shire
Shares or Shire ADSs.
BioChem Shareholders will receive $37 worth of Shire Consideration Shares
provided the average closing price of a Shire ADS during the last fifteen
trading days ending on the third trading day prior to the Closing is between
US$47.20 and US$70.80. If the Average Shire ADS price as determined above is
greater than or equal to $70.80, the exchange ratio will be fixed at 0.5226
Shire ADSs for each BioChem Share. If the Average Shire ADS price as determined
above is less than or equal to US$47.20, the exchange ratio will be fixed at
0.7839 Shire ADSs for each BioChem Share. If the Average Shire ADS price is
US$51 9/16 (being the closing price on 8 December 2000) Shire Shareholders would
be interested in approximately 53 per cent of the company going forward and
BioChem Shareholders would be interested in approximately 47 per cent of the
company going forward, assuming all existing BioChem Shareholders exchange their
BioChem Shares for Shire Shares pursuant to the Merger and assuming the exercise
of all options and warrants in respect of BioChem Shares. On the same basis, the
pro forma market capitalisation of the company going forward would be US$8.5
billion ((pound)5.9 billion). A price of $37 represents a 39.6 per cent premium
to the closing share price of BioChem on 8 December 2000.
The Merger, which is expected to close in the second quarter of 2001, is subject
to the approval of Shire and BioChem Shareholders, the absence of any material
change affecting BioChem, the accounting of the Merger as a pooling of
interests, the obtaining of regulatory approvals and other customary terms and
conditions (including admission of the new Shire Shares to be issued pursuant to
the Merger to the Official List and to trading on the London Stock Exchange).
Shire will continue to have its primary listing in London with additional
listings on NASDAQ and the Exchangeco Shares will trade on Toronto Stock
Exchange, subject to various approvals.
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For the nine months ended 30 September 2000, the unaudited results for Shire and
BioChem were as follows:
<TABLE>
<CAPTION>
Shire (US$m)* BioChem (US$m)* BioChem (C$m)*
<S> <C> <C> <C>
Revenues 380.6 156.8 230.7
Net income ** 62.0 77.0 113.2
Net assets 681.1 433.4 637.1
Net cash 41.8 186.5 274.1
</TABLE>
* Shire reports its results under US GAAP and BioChem reports its results
under Canadian GAAP
** Net income is stated prior to a APB 25 charge for Shire and prior to net
gains on sale of long term investments for BioChem
Details of the Exchange Rates that have been applied are set out at the end of
this announcement.
Commenting on today's announcement, Rolf Stahel, Chief Executive of Shire, said:
"This merger is another important step in building one of the strongest
specialty pharmaceutical companies in the world. We see significant benefits
from combining these two companies. It will further broaden and diversify our
revenue base, strengthen our early phase project pipeline and provide greater
financial strength to capitalise on our search and development capability."
Francesco Bellini, Chief Executive Officer of BioChem, said:
"This is a very positive strategic move for BioChem and its shareholders. The
pharmaceutical industry is rapidly consolidating and new leaders are emerging.
In this environment, scale and leadership are increasingly important. We are
excited by the prospects of the combined company: our two companies complement
each other extensively and the combined pipeline and financial strength are
impressive. The combined company is on track to become one of the world's
leading specialty pharmaceutical companies."
THIS SUMMARY SHOULD BE READ IN CONJUNCTION WITH THE ATTACHED PRESS RELEASE
Deutsche Bank is acting as financial adviser on the Merger to Shire, supported
by Bear Stearns, and Merrill Lynch and West LB Panmure act as brokers to Shire.
Chase H&Q and Merrill Lynch act as financial advisers to BioChem in this
transaction
3TC, Epivir, Combivir, Trizivr, Epivir-HBV, Heptovir, Heptodin and Zeffix are
trademarks of GlaxoWellcome, which is the worldwide licensee of lamivudine.
PACIS and Fluviral S/F are all trademarks of BioChem. Second Look is a trademark
of Qualia Computing, Inc and BioChem.
<PAGE>
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Analysts' conference calls and presentation
A conference call will be held for analysts at 9.30 am London time today, 11
December 2000. Please dial in +44 (0) 20 8781 0598, Password: Shire. Please call
Mo Noonan at Financial Dynamics in London on +44 (0) 20 7269 7116 for further
details.
A further conference call will be held for analysts at 8.00 am (Eastern Standard
Time) (1.00 pm London Time). Please dial from the US on 800 810 0924. From
outside the US, dial in on +1 913 981 4900. Please call Brian Gill or Paula
Schwartz at Financial Relations Board/BSMG in New York on +1 212 661 8030 for
details.
In addition, a presentation will be held for analysts at noon (Eastern Standard
Time) at The New York Palace Hotel, 455 Madison Avenue, New York. There will
also be an audio web cast at www.streetfusion.com. Please call Brian Gill or
Paula Schwartz on the above number for details.
The presentation is available on the "Investor Relations" sections of both
Shire's and BioChem's web pages at www.shire.com and www.biochempharma.com.
<TABLE>
<CAPTION>
Enquiries:
<S> <C>
Shire Pharmaceuticals Group plc BioChem Pharma Inc
Rolf Stahel, Chief Executive Francesco Bellini, Chief Executive Officer
Angus Russell, Group Finance Director Jacques Lapointe, Chief Operating Officer
Wilson Totten, Group R&D Director Fred Andrew, Chief Financial Officer
+ 44 (0) 1264 333 455 Gervais Dionne, Chief Scientific Officer
Michelle Roy, Media
Clea Rosenfeld, Investor Relations Peter McBride, Investor Relations
+ 44 (0) 1264 388 115 + 1 450 978 7771
Financial Dynamics (UK PR) Starkman and Associates (US PR)
David Yates/Sophie Pender-Cudlip Eric Starkman
+44 (0) 20 7831 3113 + 1 212 461 2226
Financial Relations Board/BSMG (US PR)
Brian Gill +1 212 455 0929
Jean Young +1 212 455 0988
</TABLE>
<PAGE>
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The "Safe Harbor" Statement Under The Private Securities Litigation Reform Act
Of 1995.
The Merger described in this announcement, in which BioChem Shareholders would
receive Consideration Shares, requires the shareholder approval of Shire and
BioChem and the solicitation of such approval has not yet commenced. This
announcement is neither an offer to purchase nor the solicitation of an offer to
sell any securities.
Statements in this press announcement regarding Shire's and BioChem's businesses
which are not historical facts, including the potential benefits and synergies
of the Merger, are "forward-looking statements" that involve risks and
uncertainties. These risks and uncertainties include the abilities of Shire and
BioChem to consummate the Merger and realise the benefits and synergies
outlined.
In connection with the Merger, Shire will file a Proxy Statement with the US
Securities and Exchange Commission ("SEC"). Other materials relating to the
Merger will also be filed with the SEC. Investors are urged to read the Proxy
Statement and other relevant documents to be filed with the SEC because they
will include important information.
Materials filed with the SEC will be available electronically, without charge,
at an internet site maintained by the SEC. The address of that site is
http:/www.sec.gov. In addition, the Proxy Statement filed with the SEC will be
mailed to BioChem Shareholders and may be obtained without charge from Shire or
BioChem upon request. Documents filed with the SEC with respect to the Merger
may be obtained without charge from Shire's Head Office at East Anton, Andover,
Hampshire, England.
Unless Shire otherwise determines, the Proxy Statement will not be sent,
directly or indirectly, in or into, or by the use of the mails or any means or
instrumentality (including without limitation, telephonically or electronically)
of interstate or foreign commerce, or facilities of a national, state or other
securities exchange of Australia or Japan and investors in Australia or Japan
will not be capable of voting with respect to approving the Merger by any such
use, means, instrumentality or facility and this announcement may not be
distributed in any such jurisdictions.
This press announcement has been issued by Shire Pharmaceuticals Group plc and
BioChem Pharma Inc. It has been approved by Deutsche Bank AG London ("Deutsche
Bank") solely for the purposes of section 57 of the UK Financial Services Act
1986.
Deutsche Bank, which is regulated in the United Kingdom by the Securities and
Futures Authority Limited, is acting for Shire and no one else in connection
with the Merger and will not be responsible to anyone other than Shire for
providing the protections afforded to customers of Deutsche Bank nor for
providing advice in relation to the Merger.
<PAGE>
11 DECEMBER 2000
MERGER OF SHIRE PHARMACEUTICALS GROUP PLC
WITH BIOCHEM PHARMA INC TO FORM A LEADING GLOBAL
SPECIALTY PHARMACEUTICAL COMPANY
Introduction
ANDOVER, UK and LAVAL, CANADA - 11 December 2000 - Shire Pharmaceuticals Group
plc (LSE: SHP.L; NASDAQ: SHPGY) ("Shire") and BioChem Pharma Inc. (TSE: BCH;
NASDAQ: BCHE) ("BioChem") announced today that they have entered into an
agreement to merge the two groups to form a leading global specialty
pharmaceutical company. The Merger will be achieved through an exchange of
shares, which values, on the basis of the current price of a Shire ADS, each
BioChem Share at US$37 (C$54.4) and BioChem at approximately US$4.0 billion
(C$5.9 billion) on a fully diluted basis.
Shire is an international specialty pharmaceutical company with a strategic
focus on four therapeutic areas: central nervous system disorders, metabolic
diseases, oncology and gastroenterology. The group has a sales and marketing
infrastructure with a broad portfolio of products, with its own direct marketing
capability in the US, Canada, UK, Republic of Ireland, France, Germany, Italy
and Spain and with plans to add Japan by 2004. Shire also covers other
significant pharmaceutical markets indirectly through distributors and sales
coverage continues to grow.
BioChem is an international specialty pharmaceutical company dedicated to the
development and commercialisation of innovative products for the prevention and
treatment of human diseases, with a focus on infectious diseases and cancer.
BioChem's first therapeutic product, 3TC/Epivir, has become the cornerstone of
HIV infection/AIDS combination therapies, most recently being launched as part
of GlaxoWellcome's Trizivir therapy. A second therapeutic product, Zeffix, an
oral treatment for chronic hepatitis B, is currently being introduced in key
markets worldwide by GlaxoWellcome, BioChem's partner for the development and
commercialisation of both 3TC/Epivir and Zeffix.
The combination of the two companies creates a leading global specialty
pharmaceutical group with pro forma revenues for the year ended 31 December 1999
of approximately US$587 million and pro forma net income (pre APB 25 charge and
exceptional costs) of approximately US$146 million under US GAAP.
BioChem Shareholders will be entitled to receive new Shire Shares or new Shire
ADSs in exchange for their BioChem Shares, with an exchange ratio based on the
average closing price of a Shire ADS during the last fifteen trading days ending
on the third trading date prior to the Closing. BioChem Shareholders resident in
Canada will be entitled to elect for Shire Exchangeco Shares instead of Shire
Shares or Shire ADSs.
BioChem Shareholders will receive $37 worth of Shire Consideration Shares
provided the average closing price of a Shire ADS during the last fifteen
trading days ending on the third trading day prior to the Closing is between
US$47.20 and US$70.80. If the Average Shire ADS price as determined above is
greater than or equal to $70.80, the exchange ratio will be fixed at 0.5226
Shire ADSs for each
<PAGE>
-2-
BioChem Share. If the Average Shire ADS price as determined above is less than
or equal to US$47.20, the exchange ratio will be fixed at 0.7839 Shire ADSs for
each BioChem Share. If the Average Shire ADS price is US$51 9/16 (the closing
price on 8 December 2000) Shire Shareholders would be interested in
approximately 53 per cent of the company going forward and BioChem Shareholders
would be interested in approximately 47 per cent of the company going forward,
assuming all existing BioChem Shareholders exchange their BioChem Shares for
Shire Shares pursuant to the Merger and assuming the exercise of all options and
warrants in respect of BioChem Shares. On the same basis, the pro forma market
capitalisation of the company going forward would be US$8.5 billion ((pound)5.9
billion). A price of $37 represents a 39.6 per cent premium to the closing share
price of BioChem on 8 December 2000.
The Boards of Directors of Shire and BioChem have given unanimous approval to
the Merger. It is intended to account for the Merger as a pooling of interests
under US GAAP. It is also intended that the Merger will qualify as a tax-free
exchange, with BioChem Shareholders resident in Canada having the opportunity to
elect for Shire Exchangeco Shares.
The Merger is expected to close in the second quarter of 2001, subject to the
approval of Shire and BioChem Shareholders, including admission of the New Shire
Shares to be issued pursuant to the Merger to the Official List and to trading
on the London Stock Exchange, review under the Hart-Scott-Rodino Act and other
customary terms and conditions. Deutsche Bank is acting as financial adviser on
the Merger to Shire, supported by Bear Stearns, and Merrill Lynch and West LB
Panmure act as brokers to Shire. Chase H&Q and Merrill Lynch act as financial
advisers to BioChem in this transaction.
The enlarged group will continue to be known as Shire Pharmaceuticals Group plc
outside of Canada and headquarted at Andover in the UK. The operational
headquarters in Canada at Laval will be known as Shire BioChem Inc.
Rationale for and benefits of the Merger
The Directors of Shire and BioChem believe that the Merger significantly
enhances the prospects for the enlarged group, creating an integrated specialty
pharmaceutical group with a broad range of marketed products complemented by a
growing pipeline of both early and late-stage projects.
The Merger capitalises on the complementary skills of the two companies.
BioChem's lead optimisation and chemistry expertise will significantly enhance
the enlarged group's R&D capability, with BioChem's activities focused on
infectious diseases, oncology and vaccines. Shire's global sales infrastructure
will enable the appropriate BioChem development stage projects to be taken
directly to market.
A broader marketed product portfolio
BioChem has developed leading positions in the HIV and HBV markets with its key
3TC/Epivir and Zeffix products which are based on the lamivudine compound.
3TC/Epivir has become a cornerstone in the treatment of HIV infection/AIDS,
first used in singular form as Epivir and latterly as part of the combination
therapies, Combivir and Trizivir. Zeffix is the first and only approved oral
anti-viral treatment for hepatitis B and has been approved for use in most Asian
markets where the disease
<PAGE>
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is particularly prevalent. BioChem's strength in the HIV infection/AIDS and
hepatitis B markets complements Shire's leadership in the Attention Deficit
Hyperactivity Disorder (ADHD) market and its therapies in metabolic diseases,
oncology and gastroenterology.
An enriched project pipeline
The enlarged group's key development projects will include Reminyl (Alzheimer's
disease), Lambda (hyperphosphatemia) and Dirame (moderate and severe pain) from
Shire, and Troxatyl (leukaemia) and frakefamide (moderate and severe pain) from
BioChem. Taken together, the enlarged group will have 7 products in registration
or Phase III clinical trials, 5 products in Phase II and 11 products in Phase I
or pre-clinical development.
A stronger R&D platform
With three separate sites in Canada and one in the USA, BioChem employs 250
scientists whose activities are focused upon anti-infective and anti-cancer
therapies. In addition, BioChem's vaccine research has a number of innovative
projects, including a recombinant-protein bacterial vaccine programme conducted
in a collaboration with the vaccine research unit of the Laval University
Hospital Research Center, and an influenza vaccine programme conducted in a
collaboration with SmithKline Beecham.
Greater financial resources to pursue future growth opportunities
During the year ended 31 December 1999, BioChem generated operating cashflow
under Canadian GAAP of US$101.9 million (C$149.8 million). As at 30 September
2000, BioChem had approximately US$87.8 million (C$129.1 million) in
indebtedness and US$274.3 million (C$403.2 million) in cash and temporary
investments under Canadian GAAP. As at the same date, Shire had indebtedness of
US$127.8 million and US$169.6 million in cash and temporary investments. The
increased financial resources will assist the enlarged group in its search for
new in-licensed products.
Information on BioChem
BioChem is an international pharmaceutical company dedicated to the development
and commercialisation of innovative products for the prevention and treatment of
human diseases, with a focus on infectious diseases and cancer. BioChem's first
therapeutic product, 3TC/Epivir, has become the cornerstone of HIV
infection/AIDS combination therapies, most recently being launched as part of
GlaxoWellcome's Trizivir therapy. 3TC/Epivir is the most widely-prescribed
antiretroviral for HIV infection/AIDS and is available in over 100 countries.
Worldwide sales, including as a component of the combination tablet, Combivir
were US$873 million in 1999. BioChem receives royalties from GlaxoWellcome on
the worldwide sales of 3TC/Epivir for the treatment of HIV infection/AIDS.
3TC/Epivir is protected by patent until 2010, with further protection expected
in the US for the combination products, Combivir and Trizivir.
A second therapeutic product, Zeffix, an oral treatment for chronic hepatitis B,
is currently being introduced to key markets worldwide by GlaxoWellcome. Zeffix
significantly improves liver function and histology in chronic hepatitis B
patients and
<PAGE>
-4-
reduces progression to cirrhosis. Zeffix is now available in a number of
countries including China, Japan, Taiwan and the USA. Worldwide sales of Zeffix
were US$73.1 million for the first nine months of 2000. BioChem receives
royalties from GlaxoWellcome on its worldwide sales of Zeffix which is protected
by patent until 2013.
With approximately 500 employees and operating from three sites in Canada and
one in the USA, BioChem has a number of projects at various stages of
development, as listed below:
<TABLE>
<CAPTION>
Product / Project Therapeutic area Phase Year of Launch
<S> <C> <C> <C>
ANTI-INFECTIVES
3TC/Epivir HIV/AIDS Commercialised 1995
Combivir HIV/AIDS Commercialised 1997
Trizivir HIV/AIDS Commercialised 2000
Zeffix HBV Commercialised 1998
BCH-10618 HIV/AIDS Pre-clinical
BCH-13520 HIV/AIDS Pre-clinical
ANTI-CANCER
PACIS Bladder cancer Commercialised 2000
Troxatyl Cancer Phase II
OTHER
Frakefamide Pain Phase II
Second Look Diagnostics Commercialised 2000
VACCINES
Fluviral S/F Anti-viral Commercialised Not applicable
Injectable cell-culture influenza Anti-viral Phase I
Nasal cell-culture influenza Anti-viral Phase I
Neisseria Meningitidis Anti-bacterial Phase I
Pseudomonas aeruginosa Anti-bacterial Pre-clinical
Group B Streptococcus Anti-bacterial Pre-clinical
BioChem's financial results, which are reported under Canadian GAAP, are as
follows:
US$m C$m
Revenues for the year ended 31 December 1999 197.4 290.2
Net income for the year ended 31 December 1999 101.4 149.1
Revenues for the nine months ended 30 September 2000 156.8 230.7
Net income for the nine months ended 30 September 2000* 77.0 113.2
Net assets as at 30 September 2000 433.4 637.1
Net cash as at 30 September 2000 186.5 274.1
*Net income is stated prior to net gains on sale of long term investments
</TABLE>
<PAGE>
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Information on Shire
Shire's global search and development expertise has to date successfully
provided eight marketed products, of which Reminyl, for the treatment of
Alzheimer's disease, has recently been launched in the UK, its first market. The
current pipeline of 16 projects includes Reminyl in registration phase in the US
and various other markets, SLI 381, Shire's once-a-day formulation of Adderall
for ADHD which was submitted to the Food and Drug Administration (FDA) on 3
October 2000, and five others that are post Phase II. Shire is actively seeking
to acquire further marketed products and development projects to enhance the
potential for future growth.
Significant growth has been achieved by Shire over the past five years with
sales increasing from US$137.6 million in 1995 to US$401.5 million in 1999,
representing an annual increase of 30.7 per cent. This growth has been partly
due to Shire's acquisition strategy, resulting in five mergers and acquisitions
during the last six years, which has enabled Shire to build an expanded global
marketing infrastructure. Shire now has direct marketing capability in seven of
the world's eight major pharmaceutical markets.
Shire's financial results, which are reported under US GAAP, are as follows:
US $m
Revenues for the year ended 31 December 1999 401.5
Net income for the year ended 31 December 1999* 52.2
Revenues for nine months ended 30 September 2000 380.6
Net income for the nine months ended 30 September 2000* 62.0
Net assets as at 30 September 2000 681.1
Net cash as at 30 September 2000 41.8
* Net income is stated pre APB 25 charge and exceptional costs
Terms of the Merger
The Boards of Directors of Shire and BioChem have unanimously approved a
definitive Merger Agreement. The summary terms of the Merger are as follows:
- The Merger will be effected by way of the Arrangement, pursuant to which
BioChem Shareholders will have the opportunity to exchange their BioChem
Shares for new Shire Shares or new Shire ADSs. The Arrangement is intended
to be accounted for as a pooling of interests for financial reporting
purposes under US GAAP.
- It is also intended that, under the Merger Agreement, BioChem Shareholders
resident in Canada will also have the opportunity to elect to dispose of
their BioChem Shares in return for new Shire Exchangeco Shares on a tax
deferred or roll-over basis for Canadian income tax purposes.
- The Shire Exchangeco Shares will be exchangeable for up to five years, at
each Shire Exchangeco shareholder's option, for new Shire Shares on a
one-for-one basis or for new Shire ADSs on a one-for-three basis. A Shire
Exchangeco
<PAGE>
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Share will provide a holder with a security having economic and voting
rights which are virtually identical to those attaching to a Shire Share.
- The exact exchange ratio of new Shire Shares for BioChem Shares, which will
be subject to a collar mechanism, will be based on the average price of a
Shire ADS during the 15 trading days ending on the third trading date prior
to the Closing (the "Average Shire ADS Price").
- The collar provides a fixed value of stock consideration provided the
Average Shire ADS Price at Closing is between US$47.20 and US$70.80. In
such circumstances, each BioChem Share will be exchanged for approximately
US$37 worth of Consideration Shares.
- In the event that the Average Shire ADS Price is less than or equal to
US$47.20, each BioChem Shareholder will receive 0.7839 Shire ADSs for each
BioChem Share. In the event that the Average Shire ADS Price is greater
than or equal to US$70.80, each BioChem Shareholder will receive 0.5226
Shire ADSs for each BioChem Share.
- Based on an Average Shire ADS Price equal to the closing price of a Shire
ADS on 8 December 2000 (the last trading day prior to this announcement) of
US$519/16, and on a fully diluted basis, Shire Shareholders would be
interested in approximately 53% and BioChem Shareholders approximately 47%
of the company going forward.
- On this basis, the merger offer would represent a premium of 39.6% over the
closing price of US$26.5 per BioChem Share on 8 December 2000 and a premium
of 51.0% over the average closing price of BioChem Shares for the last 10
trading days prior to this announcement.
- The Merger Agreement contains non-solicitation provisions as well as mutual
break fees payable in certain specified circumstances. In addition, BioChem
has granted to Shire an option to subscribe for cash, in certain specified
circumstances, newly issued BioChem Shares equivalent to up to 19.9% of
BioChem existing issued shares.
- The Merger is contingent upon, among other conditions, the approval of
Shire and BioChem Shareholders and the admission of the new Shire Shares,
to be issued pursuant to the Merger, to the Official List and to trading on
the London Stock Exchange.
- The Directors of Shire, who have received financial advice from Deutsche
Bank, have resolved unanimously to recommend Shire Shareholders to vote in
favour of the Merger. In giving advice, Deutsche Bank has placed reliance
on the Directors of Shire's commercial assessment of the Merger. The
Directors of BioChem, who have been advised by Chase H&Q and Merrill Lynch,
unanimously recommend BioChem Shareholders to vote in favour of the Merger.
New Shire Directors
It is anticipated that Dr Francesco Bellini, the Honourable James A. Grant and
Gerard Veilleux will join the board of the enlarged company in non-executive
capacities. Dr James Cavanaugh will remain as Chairman of the enlarged company
<PAGE>
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and Mr Stahel, Mr Russell and Dr Totten will continue in their capacities with
the enlarged company as Chief Executive, Group Finance Director and Group R&D
Director respectively.
Dr. Bellini was a co-founder of BioChem in 1986 and is the company's current
Chairman and Chief Executive Officer. Dr. Bellini received a B.Sc. in chemistry
from Loyola College in Montreal in 1972, and a Ph.D. in organic chemistry from
the University of New Brunswick in 1977.
James Grant, a Director of BioChem since 1986, is a partner with the law firm of
Stikeman, Elliot in Montreal. Mr. Grant, who also sits on the boards of several
other prominent Canadian corporations, attended McGill University receiving a
B.A. in arts in 1958 and a B.C.L. in law in 1961.
Gerard Veilleux joined the BioChem Board in 1999. He is President of Power
Communications Inc. and Vice-President of Power Corporation, a diversified
management and holding company. Mr. Veilleux is a director of several public and
private companies as well as a member of the Board of Governors of McGill
University. He has a Master's degree in public administration from Carleton
University and a Bachelor of Commerce from Laval University.
<PAGE>
-8-
Financial Information
Shire will continue to report primarily under US GAAP. Shareholders may elect to
receive full UK GAAP accounts in addition to US GAAP accounts. It is intended
that the Merger will be accounted for as a pooling of interests under US GAAP.
Under UK GAAP, the Merger will be accounted for as a purchase.
Under US GAAP, the combined unaudited pro forma profit and loss account of Shire
and BioChem for the year ended 31 December 1999 is as follows:
<TABLE>
<CAPTION>
Pro forma Information
Shire BioChem Total Growth
$000 $000 $000 '99 v `98
<S> <C> <C> <C> <C>
Revenue 401,532 185,694* 587,226 30%
Cost of sales (93,475) (9,573) (103,048) -
R&D (77,503) (60,251) (137,754) (47%)
Selling & G&A (130,855) (17,781) (148,636) (22%)
EBITDA 99,699 98,089 197,788 50%
Depreciation & amortisation (28,598) (5,574) (34,172) (14%)
----- ----- ----- -----
Operating income 71,101 92,515 163,616 61%
Interest receivable 7,349 5,066 12,415 (5%)
Interest payable (9,742) (1,902) (11,644) (75%)
Other, net (475) 16,098 15,623 120%
----- ----- ----- -----
Income before taxes, APB 25 charge & exceptionals
68,233 111,777 180,010 536%
Income taxes (16,062) (6,500) (22,562) (179%)
----- ----- ----- -----
Net income from continuing operations pre APB 25 charge
& exceptionals 52,171 105,277 157,448 679%
(Loss) from discontinued operations, net of tax - (11,946) (11,946) (904%)
----- ----- ----- -----
Net income before APB 25 charge & exceptionals 52,171 93,331 145,502 665%
Exceptional items (135,236) - (135,236) nm
APB 25 charge (11,933) - (11,933) (119%)
----- ----- ----- -----
Net (loss)/income (94,998) 93,331 (1,667) (112%)
----- ----- -----
</TABLE>
* Includes CliniChem revenue of $49,296k
The financial information relating to Shire contained in this announcement does
not constitute Shire's statutory accounts within the meaning of section 240 of
the Companies Act. Statutory accounts for the year ended 31 December 1999 have
been delivered to the Registrar of Companies of England and Wales. Arthur
Andersen, Shire's auditors, have made a report on them under section 235 of the
Act and such report was not qualified and contained no statement under section
237 (2) or (3) of the Act.
The impact of the Merger on Shire's earnings per share will depend on the number
of Consideration Shares to be issued pursuant to the Merger. With opportunities
for synergies resulting from the Merger, the Directors of Shire expect it to be
earnings
<PAGE>
-8-
accretive for Shire's earnings in the first full year. However, a substantial
one-time restructuring charge is expected at the time of Closing.
Litigation
BioChem, together with GlaxoWellcome, its partner in the commercialisation of
3TC and Zeffix, is a defendant in certain patent litigation brought against them
by Emory University regarding patent infringement of US sales of lamivudine. The
Directors of Shire believe that the US Patent Office may deliver its ruling in
the first half of 2001 and possibly prior to the Closing. On the basis of all
facts and information disclosed by BioChem to Shire as at the date of the Merger
Agreement, the outcome of the proceedings instituted by Emory University in the
United States would not, for the purposes of the Agreement, be considered to
have a material adverse change on BioChem. Consequently, such ruling should not
itself cause or permit Shire to terminate the Merger Agreement. With advice from
external counsel, the Directors of Shire have assessed the probability of
receiving such an adverse ruling and have taken into account such considerations
in agreeing to the economic and contractual terms of the Merger.
3TC, Epivir, Combivir, Trizivr, Epivir-HBV, Heptovir, Heptodin and Zeffix are
trademarks of GlaxoWellcome, which is the worldwide licensee of lamivudine.
PACIS and Fluviral S/F are all trademarks of BioChem. Second Look is a trademark
of Qualia Computing, Inc and BioChem.
The "Safe Harbor" Statement Under The Private Securities Litigation Reform Act
Of 1995.
The Merger described in this announcement, in which BioChem Shareholders would
receive Consideration Shares, requires shareholder approval of Shire and BioChem
and the solicitation of such approval has not yet commenced. This announcement
is neither an offer to purchase nor the solicitation of an offer to sell any
securities. The offer of Consideration Shares as merger consideration to BioChem
Shareholders will be made only through a Proxy Statement which will be sent to
those shareholders.
Statements in this press announcement regarding Shire's and BioChem's businesses
which are not historical facts, including the potential benefits and synergies
of the Merger, are "forward-looking statements" that involve risks and
uncertainties. These risks and uncertainties include the abilities of Shire and
BioChem to consummate the Merger and realise the benefits and synergies
outlined.
In connection with the Merger, Shire will file a registration statement with the
US Securities and Exchange Commission ("SEC"). Other materials relating to the
Merger will also be filed with the SEC. Investors are urged to read the Proxy
Statement and other relevant documents to be files with the SEC because they
will include important information.
Materials filed with the SEC will be available electronically, without charge,
at an internet site maintained by the SEC. The address of that site is
http:/www.sec.gov. In addition, the Proxy Statement filed with the SEC will be
mailed to BioChem Shareholders and may be obtained without charge from Shire or
BioChem upon request. Documents filed with the SEC with respect to the Merger
may be obtained
<PAGE>
-9-
without charge from Shire's Head Office at East Anton, Andover, Hampshire,
England.
Unless Shire otherwise determines, the Proxy Statement will not be sent,
directly or indirectly, in or into, or by the use of the mails or any means or
instrumentality (including without limitation, telephonically or electronically)
of interstate or foreign commerce, or facilities of a national, state or other
securities exchange of Australia or Japan and investors in Australia or Japan
will not be capable of voting with respect to approving the Merger by any such
use, means, instrumentality or facility and this announcement may not be
distributed in any such jurisdictions.
This press announcement has been issued by Shire Pharmaceuticals Group plc and
BioChem Pharma Inc. It has been approved by Deutsche Bank AG London ("Deutsche
Bank") solely for the purposes of section 57 of the UK Financial Services Act
1986.
Deutsche Bank, which is regulated in the United Kingdom by the Securities and
Futures Authority Limited, is acting for Shire and no one else in connection
with the proposed merger and will not be responsible to anyone other than Shire
for providing the protections afforded to customers of Deutsche Bank nor for
providing advice in relation to the proposed merger.
<PAGE>
-10-
Definitions
In this document, the following expressions have the following meanings, unless
the context requires otherwise:
"Arrangement" the plan of arrangement, pursuant to section
192 of the Canada Business Corporations Act,
involving Shire, BioChem and Exchangeco
"Bear Stearns" Bear, Stearns & Co. Inc.
"BioChem" BioChem Pharma Inc, a company incorporated
under the laws of Canada
"BioChem Shareholders" the holders of BioChem Shares
"BioChem Shares" the outstanding common shares in the
capital of BioChem Pharma Inc
"Canadian GAAP" generally accepted accounting
principles in Canada
"Chase H&Q" Chase H&Q, a division of Chase
Securities
"Companies Act" or the "Act" the Companies Act 1985 (as amended)
"Closing" the closing of the Arrangement
"Deutsche Bank" Deutsche Bank AG, London
"Exchangeco" 3829341 Canada Inc, a company incorporated
under the laws of Canada and being an
indirect wholly owned subsidiary of Shire
"GlaxoWellcome" GlaxoWellcome plc, a company incorporated in
England
"Merger" the proposed acquisition of all of the share
capital of BioChem, on the terms and
conditions set out in the Merger Agreement,
to be effected pursuant to the Arrangement
"Merger Agreement" the merger agreement dated as of
10 December 2000 among BioChem, Shire and
Exchangeco
"Merrill Lynch" Merrill Lynch & Co. Inc in its
capacity as adviser to BioChem and Merrill
Lynch International in its capacity as broker
to Shire, as the context requires
"Official List" the official list of the United Kingdom
Listing Authority
"Shire" Shire Pharmaceuticals Group plc, a company
incorporated in England
<PAGE>
-11-
"Shire ADSs" American Depository Shares, issuable
upon deposit of Shire Shares, each
representing three Shire Shares
"Shire Consideration Shares" the new Shire Shares,
new Shire ADSs and or "Consideration Shares"
new Shire Exchangeco Shares to be issued
pursuant to the Merger Agreement
"Shire Exchangeco Shares" the exchangeable shares to
be created in the capital of Exchangeco,
exchangeable for Shire Shares or Shire ADSs
in accordance with the rights attaching to
such exchangeable shares
"Shire Group" Shire and its subsidiaries and
subsidiary undertakings
"Shire Shareholders" the holders of Shire Shares
"Shire Shares" ordinary shares of 5p each in the
capital of Shire
SmithKline Beecham SmithKline Beecham plc, a company
incorporated in England
"UK" or "United Kingdom" the United Kingdom of
Great Britain and Northern Ireland
"UK GAAP" generally accepted accounting
principles in the United Kingdom
"US GAAP" generally accepted accounting
principles in the United States
"US" or "United States" the United States of America, its territories
and possessions, any States of America and
the District of Columbia, and all other areas
subject to its jurisdiction
"West LB Panmure" West LB Panmure Limited
Exchange Rates
Values throughout this announcement have been translated from Canadian dollars
to US dollars (for illustration purposes only) using an exchange rate of C$1:US$
1.47 and from US dollars to UK sterling (for illustrative purposes only) using
an exchange rate of (pound)1:
US$1.44
<PAGE>
-12-
Unless stated otherwise, "US$" refers to the currency of the United States of
America, "C$ "refers to the currency of Canada and "(pound)" refers to the
currency of the United Kingdom.
