March 15, 2007

 

Schering-Plough to acquire Akzo Nobel's Organon BioSciences

 

Press release
 

 

Schering-Plough Corporation is set to acquire Organon BioSciences N.V., the human and animal health care businesses of Akzo Nobel N.V., for approximately US$11 billion in cash (US$14.4 billion based on closing exchange rate on Mar 9, 2007).

 

In Schering-Plough's Mar 12 press release on the acquisition, the company revealed that the transaction, expected to close by end-2007, should be accretive to Schering-Plough's earnings per share (EPS) by about US$0.10 in the first full year, excluding purchase-accounting adjustments and acquisition-related costs.

 

Fred Hassan, Schering-Plough's chairman and chief executive officer, commented, "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. It is the right deal at the right time as we accelerate into the Build the Base phase of our transformation."

 

Hassan added that Organon BioSciences would be an excellent fit with Schering-Plough strategically, scientifically and financially, as it builds on Schering-Plough's growing strength in primary care, giving the company immediate access to central nervous system (CNS) and women's health care products.

 

With Organon BioSciences's strong biologics manufacturing capability, the acquisition enhances Schering-Plough's strength in human and animal biologic products, including the potential to develop human vaccines, said Hassan.

 

He also expressed confidence that the move would propel Schering-Plough towards becoming 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 US$5 billion. The pharmaceutical business, Organon, had sales of US$3.4 billion in 2006 (based on closing exchange rate on Mar 9, 2007).

 

In addition, the animal health business, Intervet, with sales of approximately US$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 to achieve annual synergies of US$500 million within three years from the closing of the deal. Schering-Plough will finance the acquisition through a mix of cash, debt and equity.

 

Hassan sees a smooth and efficient transition ahead given the complementary nature of Schering-Plough's and Organon's businesses, as well as the track record of Schering-Plough's management team in executing transformational change.

 

Hans Wijers, chief executive officer of Akzo Nobel, expressed satisfaction with the partnership, as Schering-Plough, being one of the world's leading pharmaceutical companies, would "give more scope to develop the unique capabilities of Organon BioSciences."

 

Apart from delivering significant value for Organon BioSciences, the transaction also takes into account the interests of its stakeholders, added Wijers.

 

Organon's research and manufacturing facility in Oss, the Netherlands, will be the centre of Schering-Plough's global gynecology and fertility activities, while Organon's neuroscience research will continue in Newhouse, Scotland.

 

On the animal health side, 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 diseases.

 

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. Both parties have committed to execute a fully negotiated share purchase agreement upon completion of customary consultation procedures in the Netherlands, involving social partners as well.

 

Goldman Sachs & Co. acted as financial advisor to Schering-Plough, and Morgan Stanley acted as financial advisor to Akzo Nobel in this transactio