BioWhittaker to be bought by N.J. firm Cambrex purchasing Walkersville firm for $130.9 million

No changes in work force

Acquisition combines biotechnology, drug industry suppliers

August 26, 1997|By Mark Guidera | Mark Guidera,SUN STAFF

Cambrex Corp., a supplier for the pharmaceutical industry, said yesterday that it has agreed to buy BioWhittaker Inc., for $130.9 million.

East Rutherford, N.J.-based Cambrex said it did not expect any changes in BioWhittaker's management or in its 420-member work force because there is little overlap in products, despite the companies having many of the same customers.

BioWhittaker, headquartered in Walkersville in Frederick County, is a supplier to the biotechnology industry.

The deal does not come as a surprise. BioWhittaker has been for sale since May. It hired Alex. Brown & Sons last November to help it explore strategies to boost shareholder value in the company, after its stock price remained flat, despite several successful moves to boost earnings.

The company said its board had approved Cambrex's cash offer. It amounts to $11.6250 a share, a $1.3125 premium over BioWhittaker's closing price Friday of $10.3125.

James Mack, chief executive officer of Cambrex, said his company pursued the acquisition because BioWhittaker's line of cell culture and testing products would give Cambrex a firm foothold in the booming biotech industry.

BioWhittaker's products are primarily used by biotechnology companies for research and drug manufacturing.

Cambrex employs about 1,300 people worldwide. The company, which netted $28.2 million on $359.4 million in sales last year, specializes in supplying pharmaceutical firms with specialty chemicals for product development and manufacturing.

Mack said Cambrex wants to position itself to take advantage of rapid growth expected in the biotechnology industry, as a growing number of biotechnology companies move products to regulators for marketing approval and expand research efforts.

He cited the fact that the number of biotechnology-related drugs and other products under review by the FDA has jumped in the past year to 700 from 400.

Cambrex estimates that the biotechnology industry will see revenue grow to $75 billion from the current $9 billion in the next several years, Mack said.

"This is an excellent opportunity for Cambrex," Mack said.

Cambrex's traditional pharmaceutical customers also are increasing their own biotechnology research efforts, he said.

The company has been looking for a way to expand into the biotechnology supplies business, but found that launching its own products division would be cost prohibitive and time consuming, Mack said.

By acquiring BioWhittaker, "We become a one-stop shop for our customers," said Peter Tracy, executive vice president for corporate development at Cambrex.

Noel L. Buterbaugh said he expects BioWhittaker to benefit from the deal by having a larger sales and distribution group behind its product line.

BioWhittaker's core products, sold to 5,000 customers worldwide, are living cell cultures and a line of endotoxin products which can detect contaminants in injectable pharmaceuticals.

Sales of the cell culture and endotoxin products have expanded by 25 percent in the first nine months of this year, the companies said.

The company made $7 million on sales of $55.8 million in 1995.

The deal could close in 30 to 90 days, depending on the number of shares tendered, Cambrex said.

The offer is conditioned upon at least 50 percent of BioWhittaker's 10.8 outstanding million shares being tendered, said Philip L. Rohrer Jr., chief financial officer of BioWhittaker.

BioWhittaker's largest owner, German drug maker Boehringer Ingelheim GmbH, which holds almost 20 percent of the shares, has already agreed to the deal, said Rohrer.

Also, company managers and employees have agreed to tender their shares and options, bringing the number of shares already locked in to 30 percent.

If at least 90 percent of the shares are tendered, the deal can proceed without a shareholder vote. However, if between 50 percent and 90 percent are tendered, a shareholders meeting must be held and a vote on the transaction taken.

If the deal dies, BioWhittaker would owe Cambrex more than $1.5 million in break-up and termination fees, Rohrer said.

It is unclear if the deal will include BioWhittaker's option to purchase a 50 percent stake in a European cell culture and endotoxin test business that it helped Boehringer Ingelheim launch.

Boehringer Ingelheim controls whether the option would be transferred to a buyer, said Rohrer. But Cambrex can't terminate the acquisition if the option isn't transferred, he said.

The option could be executed for about $9 million. The European-based business generates about $40 million annually in revenue, BioWhittaker officials say.

Pub Date: 8/26/97

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