Drugs giant set to unveil takeover deal

Pharmaceuticals giant Astra Zeneca is this week expected to announce a deal to acquire smaller rival Cambridge Antibody Technology, it was reported today.

The move is expected to value Cambridge Antibody Technology (CAT) at more than £600m, well up on the £420m it is currently valued at after its shares closed at 796.5p on Friday, according to the Sunday Times newspaper.

Astra Zeneca, which is reportedly being advised on the deal by investment bank Goldman Sachs, already has close ties with the Cambridge-based group after the pair agreed a strategic development alliance in November 2004.

Under the terms of the agreement Astra Zeneca paid £75m for a 19.9% stake in CAT, and the two groups agreed to spend at least £100m on 25 drug discovery projects, focusing on respiratory disease and other inflammatory disorders.

Astra Zeneca could not be contacted to comment, but CAT put out a statement confirming it was currently in discussions with Astra Zeneca which may or may not lead to an offer for the company.

If an offer does go ahead it would be the latest in a long line of acquisitions and deals carried out by the Astra Zeneca since last year.

It has spent £121m buying Cambridge-based biotech firm KuDOS Pharmaceuticals, and also agreed a deal worth up to £173m with American firm Targacept to help develop a treatment for Alzheimer’s disease and schizophrenia.

Astra signed an agreement in November worth £195m to licence septic shock treatment CytoFab from UK rival Protherics, and most recently it paid $200m to rival Abraxis BioScience in return for the right to promote jointly its Abraxane cancer therapy.

Last month the group increased its profits target for the full year after saying patients had used more of its five top medicines, including fat-busting Crestor and schizophrenia drug Seroquel.

It said sales of its quintet of blockbuster treatments grew by 25% to $3bn – twice as fast as its pharmaceuticals portfolio as a whole.

Stronger margins from price rises in the United States were also behind a 35% hike in quarterly profits before tax to $2.04bn at fixed exchange rates.

As a result it expects earnings per share to be in the range of 3.6 US dollars to 3.9 US dollars – better than its earlier forecast of 3.4 US dollars to 3.6 US dollars.

Last year CAT said its operating losses for the year to September 30 had narrowed to £9.3m from £42.2m during the previous 12 months.

It also settled a legal dispute with US-firm Abbott Laboratories over the amount of royalties it received for its best-selling arthritis drug Humira which it licensed to Abbott.