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OGS withdraws CAT offer recommendation

Published on 29/10/03 at 04:39pm

Oxford GlycoSciences has withdrawn its support of Cambridge Antibody Technology's £110 million all-share bid for the company, despite believing a merger with its rival is in shareholders' best interests.

OGS cancelled an extraordinary shareholders meeting to allow investors more time to consider rival takeover bids, which include a £101 million all-cash bid by Celltech the UK biggest biotech company.

The company based its decision to withdraw its support of the CAT offer on the difference in value between the two bids, as well as on advice from Goldman Sachs. The board said it believed it would now allow "adequate time to explore options for maximising value," with analysts now anticipating a new raised bid from CAT.

But OGS says Celltech's "opportunisticoffer does not reflect the true value of the business and its cash reserves, and would not give shareholders any future participation in the company.

"Our Board continues to believe that the strategic benefits of a merger with CAT remain valid and the combination represents an opportunity to create a leading European biotechnology company,"said David Ebsworth, OGS Chief Executive, advising that shareholders should take no action in respect of Celltech's offer.

OGS said it would discuss with CAT the possibility of a revised offer, as well as seeking for and considering offers from other companies.

Mr Ebsworth will also be expecting an increased bid from Celltech, but the board is likely to remain opposed to the takeover, which will probably see much of the company's R&D operations closed down.

Immuno-Designed Molecules, the French company behind OGS's US partner Medarex, is also expected to weigh into the bidding war with a mixed cash and share offer.

CAT shares have risen on the news of the delayed OGS meeting, reassuring investors that the deal is not yet dead

Meanwhile, OGS's marketing partner Actelion has launched the company's first ever product in the European Union.

Mr Ebsworth said: "The launch of Zavesca is further evidence that OGS's management continues to deliver results as it said it would. Revenue from Zavesca sales will help us achieve our goal of profitability in our Inherited Storage Disorders division in 2005. This launch also marks a significant achievement since we have successfully taken a product all the way through development to market putting OGS in an exclusive league of biotech companies."

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