Schering-Plough to
Acquire Organon BioSciences
Acquisition
Builds Strength And Scale For The Long Term, Adding Five Phase
III
Projects
To Pipeline And Expanding Human And Animal Biologics Capabilities
Schering-Plough Corporation today announced that its Board of
Directors has approved a transaction under which Schering-Plough
will acquire Organon BioSciences N.V., the human and
animal health care businesses of Akzo Nobel N.V., for approximately Euro11
billion in cash ($14.4 billion based on closing exchange rate on
March 9, 2007). The transaction, which is expected to close by
the end of 2007, is anticipated to be accretive to
Schering-Plough's earnings per share (EPS) by about 10 cents in
the first full year, excluding purchase-accounting adjustments
and acquisition-related costs.
"With this transaction we take another major step in our
Action Agenda to transform Schering-Plough into a global
high-performance company for the long term," said Fred
Hassan, chairman and chief executive officer, Schering- Plough.
"It is the right deal at the right time as we accelerate
into the Build the Base phase of our transformation."
"Organon BioSciences will be an excellent fit with
Schering-Plough - strategically, scientifically and
financially," said Hassan. "It builds on our growing
strength in primary care, giving us immediate access to central nervous
system (CNS) and women's health care products. The acquisition of Organon
BioSciences also fills a gap in our late-stage pipeline by adding
five compounds in Phase III development and a number of promising
projects in Phase II development. And, we believe that the two
cultures are very much in tune." Added Hassan, "In
addition, the acquisition of Organon BioSciences enhances
Schering-Plough's strength in human and animal biologic products,
including the potential to develop human vaccines. In light of
Schering-Plough's expanding early pipeline, Organon BioSciences's
strong biologics manufacturing capability is a further important
asset for the combined company. With this acquisition,
Schering-Plough will become a leading animal health care company,
with premier biologics capabilities."
Organon BioSciences provides Schering-Plough with a steadily
growing base of products and businesses with top-line sales of
nearly $5 billion. The pharmaceutical business, Organon, had
sales of $3.4 billion in 2006 (based on closing exchange rate on
March 9, 2007), including leading products such as
Follistim/Puregon, a follicle-stimulating hormone for
infertility; Esmeron/Zemuron, a muscle relaxant; and NuvaRing and
Implanon for contraception. In addition, the animal health
business, Intervet, with sales of approximately $1.5 billion in
2006, is one of the top three animal health care companies
globally, with products treating a broad array of animals and
disease states.
Financially, Schering-Plough expects the transaction to be
accretive in the first full year, excluding purchase-accounting
adjustments and acquisition-related costs. Schering-Plough
expects to achieve annual synergies of $500 million; it will take
three years from the closing to reach this level of synergies.
Schering-Plough will finance the acquisition through a mix of
cash, debt and equity.
"Given the complementary nature of our businesses and the
track record of Schering-Plough's management team in executing
transformational change, we expect a smooth and efficient
transition that will allow us to unlock more value from the
Organon BioSciences products and pipeline than would have been
possible on a stand-alone basis," said Hassan. "We have
great respect for the talented people of Organon BioSciences and
look forward to working together as we continue on our path
toward building a new kind of health care company," he
added.
Commenting on today's announcement, Hans Wijers, chief executive
officer, Akzo Nobel, said: "The sale of Organon BioSciences
is a major milestone in the history of Akzo Nobel. It is a
fundamental step towards our goal of creating a focused
international industrial player. At the same time, we are
convinced that we have found a good home for Organon BioSciences.
While an independent future also offered potentially exciting
possibilities, the partnership with Schering-Plough, one of the
world's leading pharmaceutical companies, will give more scope to
develop the unique capabilities of Organon BioSciences. We
believe that this transaction delivers significant value for our
shareholders, and also takes into account the interests of our
stakeholders."
In addition to the currently marketed products, Organon
BioSciences currently has five compounds in Phase III
development, including:
Asenapine, a novel psychopharmacologic agent for the treatment of
patients with schizophrenia and acute mania bipolar disorder;
Sugammadex, for the reversal of neuromuscular blockade induced
during surgical procedures;
NOMAC/E2, an oral contraceptive product containing nomegestrol
acetate, a novel progesterone, and estriadiol, a natural
estrogen;
ORG36286, a long-acting recombinant follicle-stimulating hormone
for infertility; and
Esmirtazapine (ORG50081), for the treatment of insomnia and
potentially for hot flashes in menopausal women.
Organon's research and manufacturing facility in Oss, the
Netherlands, will be the center of Schering-Plough's global
gynecology and fertility activities, while Organon's neuroscience
research will continue in Newhouse, Scotland.
On the animal health side, this acquisition creates a leading
animal health business based on 2006 sales. The businesses are
strong and complementary. Intervet's products include Nobivac, a
range of canine vaccines; Panacur, a de-wormer; Bovilis, a bovine
biological for disease control and eradication; and Nobilis, a
poultry vaccine to keep flocks free from infectious disease.
Schering-Plough Animal Health has a strong business in treatments
for cattle and companion animals, including products such as
NUFLOR, an antibiotic for cattle, swine and fish; BANAMINE, an
anti- inflammatory for cattle, horses and swine; and OTOMAX, a
canine otic ointment. Schering-Plough Animal Health and Intervet
will continue to operate at their existing locations. While
maintaining the strong pharmaceutical leadership team and
competencies in the United States, Boxmeer, the Netherlands, will
become the headquarters of the global animal health business.
The transaction is subject to certain closing conditions,
including regulatory approvals. Shareholder approval is not
required for the transaction to be consummated by either Akzo
Nobel or Schering-Plough. The parties have committed to execute a
fully negotiated share purchase agreement upon completion of
customary consultation procedures in the Netherlands, including
with social partners.
Goldman Sachs & Co. acted as financial advisor to
Schering-Plough, and Morgan Stanley acted as financial advisor to
Akzo Nobel in this transaction.