Pennsylvania-based biopharmaceutical company Cephalon has said that its wholly-owned subsidiary, Cephalon International Holdings, intends to make a A$318 million takeover offer for Arana Therapeutics Limited.
The offer has the support of the Arana independent directors and will be recommended to Arana shareholders in the absence of a superior proposal.
Arana has a pipeline of biologic compounds for inflammatory diseases and cancer at various stages of discovery and development.
Under the terms of the proposal, Cephalon intends to offer A$1.40 cash for each Arana ordinary share cum dividends and other rights. The total offer value is approximately A$318 million (US$207 million). The offer price represents a 70% premium to Arana's 90-day volume weighted average price and a 69% premium to the closing price on February 25, 2009, the last trading day prior to this announcement.
Cephalon said that if it obtains a relevant interest in 90% of Arana shares and the offer conditions are satisfied or waived, it will increase its offer price by A$0.05 per share. This offer price increase will be payable to all shareholders no matter when their acceptances are received, the company said. In these circumstances accepting Arana shareholders will receive A$1.45 per share.
Cephalon intends to fund the offer price using a portion of its existing cash balance.
To support its offer, Cephalon has acquired a shareholding in Arana, representing an ownership position of approximately 19.9% of the total issued share capital of Arana. The purchase price of the shares was A$1.40 per share. Cephalon has acquired this stake from Arana's two largest shareholders, Start-up Australia Ventures Pty Ltd and Rockwell Securities Limited.
Cephalon's offer will be subject to certain basic conditions, including a 50.1% minimum acceptance condition. It is well advanced in the preparation of its Bidder's Statement, and expects the offer will be open for acceptance by mid-March.
Kevin Buchi, CFO of Cephalon, said: "Cephalon is offering Arana shareholders the opportunity to de-risk their investment portfolios by taking cash for their shares at a time when cash provides certainty and stability. We are better equipped to take Arana's lead compound, ART621, through clinical development and, pending the success of clinical trials, to international markets."
