Cephalon announces ChemGenex takeover bid
by Kelsey Kaustinen  |  Email the author


FRAZER, Pa. & MELBOURNE, Australia—Cephalon CXS Holdings Pty Ltd., a wholly-owned subsidiary of Cephalon, Inc., announced today that it intends to make a takeover bid for Australian biopharmaceutical company ChemGenex. The announcement was made jointly by the two companies and has unanimous support from the ChemGenex directors, who will recommend the bid to the company's shareholders and the holders of ChemGenex listed options in the absence of a better offer.  
Through another of its wholly-owned subsidiaries, Cephalon International Holdings Inc., Cephalon agreed to subscribe for A$15 million of ChemGenex convertible notes in October 2010, and also entered into call option agreements with Stragen International N.V. and Merck Santé S.A.S., two of ChemGenex's major shareholders. In December 2010, the company's shareholders gave advance approval to the conversion of the notes at a general meeting. As of today, Cephalon International has served notice to convert those notes and to exercise its call options in order to acquire in aggregate 86.4 million shares of ChemGenex. As a result, Cephalon International will hold a total of 27.57 percent of ChemGenex's issued shares.
"The ChemGenex board welcomes Cephalon's bid, which represents an attractive premium to the current and recent trading prices of ChemGenex shares," says Brett Heading, ChemGenex chairman. "In the absence of a superior offer, the board will unanimously recommend that ChemGenex shareholders accept the offer and realize value for their shares."
Cephalon's takeover bid consists of two offers:
• an offer of A$0.70 (US $0.72) cash for each ChemGenex share, cum dividends and other rights; and
• an offer of A$0.02 (US $0.02) cash for each ASX-listed ChemGenex option.  
The total offer value for ChemGenex's shares and listed ChemGenex options is approximately A$159 million (US$163 million), and the offer values all ChemGenex shares and options at approximately A$225 million (US$231 million).
After receiving advice on applicable U.S. law requirements, Cephalon will also consider extending the share offer to holders of ChemGenex American Depository Receipts, so long as compliance with said requirements isn't impracticable.  
"The proposed transaction allows ChemGenex shareholders to realize cash proceeds at a significant premium to recent trading levels," said Kevin Buchi, CEO of Cephalon.
ChemGenex focuses primarily on hematology, and is currently developing its lead product candidate, OMAPRO. OMAPRO, intended for the treatment of patients with chronic myeloid leukemia, recently completed Phase III clinical trials. ChemGenex plans to file a new drug application with the U.S. Food and Drug Administration in the second half of the year.  
The takeover bid is just one of several recent business developments for Cephalon. Also this month, Cephalon has signed a definitive merger agreement with Gemin X Pharmaceuticals, Inc., to acquire all of their outstanding capital stock for $225 million. In addition, Cephalon has entered into a technology collaboration with Champions Biotechnology Inc. Both ventures reflect Cephalon's recent focus on developing the oncology branch of its pipeline, as does the ChemGenex takeover bid, which Buchi says "adds an interesting late-stage opportunity to our portfolio."  
In a letter to his company, Buchi notes that "by strategically investing in a comprehensive pipeline now, Cephalon will ensure that it has the opportunities to continue to grow far into the future." The statement, a reflection on Cephalon's Q4 earnings and performance, goes on to add that the company has "five Phase III programs planned for 2011 and three additional Phase III programs planned for 2012," which Buchi says will provide the company with "a wealth of opportunities to effectively and efficiently develop a strong pipeline."  
Cephalon will be finalizing and mailing out its Bidder's Statement and ChemGenex will be finalizing and mailing out its Target Statement as soon as practicable. Cephalon is being advised by Merrill Lynch and Johnson Winter & Slattery for the bid, and ChemGenex is being advised by Canaccord Genuity and McCullough Robertson.
Code: E03291101

1000 N West Street, Suite 1200,
Wilmington, Delaware, 19801
Ph: 888-781-0328 |  Fax: 705-528-0270
© Copyright 2020 Old River Publications LLC. All righs reserved.  |  Web site managed and designed by OffWhite.