Proposed Disposal Of The Discovery Solutions Division To Millennium Pharmaceuticals, Inc.
Oxford - 7 July 2000
Die haben meiner Meinung nach massive finanzielle Probleme:nach der Meldung vom 5.Juli unter News sind die Softwareverkäufe stark zurückgegangen,nach der beigefügten Meldung sehen sie sich genötigt,das gesamte Aktienkapital von Cambridge Discovery Chemistry an Millennium zu verkaufen,wofür sie 33 Millionen erhalten.Der Jahresbericht von 1999 zeigte , dass der Verlust von -2,3/share auf -30/share gestiegen war,der Gewinn von +17,8 auf -14,7 gefallen war
Introduction
Oxford Molecular Group PLC ("OMG") announces that it has agreed to sell the entire issued share capital of Cambridge Discovery Chemistry Limited together with, subject to pre-emption rights, its minority interests in Prolysis Limited and Cambridge Drug Discovery Holdings Limited (the "Discovery Solutions Division") to Millennium Pharmaceuticals, Inc. at an equity value of £35 million. The cash consideration payable to OMG for the proposed Disposal is £33.5 million. Millennium Pharmaceuticals, Inc. will also make a payment to holders of options in Cambridge Discovery Chemistry Limited of £1.5 million.
The proposed Disposal is conditional, inter alia, upon the approval of Shareholders of OMG which is to be sought at an Extraordinary General Meeting of the Company.
Information on the Discovery Solutions Division
The Discovery Solutions Division provides services to accelerate the discovery research process, servicing the pharmaceutical, agrochemical and biotechnology industries. It has developed technologies for discovery research, including molecular design, novel chemistries, new synthetic chemistry platforms and an integrated informatics system. The Discovery Solutions Division acts as an extension to the resources of its collaborators with solutions for discovery research, including medicinal and combinatorial chemistry for generation, validation, optimisation and technology transfer as required.
For the 12 months ended 31 December 1999, the Discovery Solutions Division reported an operating loss (before allocation of Group administrative expenses) of £108,000 and turnover of £8.45 million. The net assets of the division were £5.28 million as at 31 December 1999.
Background to and reasons for the proposed Disposal
As reported in the Company's preliminary results for the year ended 31 December 1999 announced on 28 April 2000, the Company made a significant loss in 1999. A major restructuring programme was undertaken in late 1999 and its implementation has continued during the current year. In addition, further debt facilities and the issue of warrants convertible into Ordinary Shares, to fund both the reorganisation and further development of the Company's businesses, were approved by shareholders on 25 May 2000.
During this year, the Board of OMG has been exploring the strategic alternatives open to the Group to deliver value to shareholders. To this end, the Board has held discussions with a number of parties regarding their possible interest in acquiring either OMG or its businesses.
The Board has concluded that the Discovery Solutions Division's future prospects would be better as part of another organisation which has greater scale and resources. The Board believes that the sale of the Discovery Solutions Division represents the best way forward as a means of addressing the Group's debt burden and exiting from a business that also requires substantial capital to achieve its full potential. The Board is in discussion with another party which is interested in acquiring the Software Solutions Division and a further announcement will be made as and when appropriate.
Terms of the proposed Disposal
Completion of the Disposal is conditional upon the approval by Shareholders of OMG at an Extraordinary General Meeting. If the resolution is not passed on or before the Extraordinary General Meeting, the Disposal Agreement will terminate and OMG may have to make a payment to Millennium Pharmaceuticals, Inc. of between £500,000 and £1,375,000.
Financial effects of the proposed Disposal and application of sale proceeds
The Directors believe that completion of the proposed Disposal is crucial to the financial viability of the Continuing Group.
The cash consideration for the Discovery Solutions Division is £33.5 million. The net cash proceeds receivable by OMG (after expenses but before tax) are expected to be approximately £32.3 million. The potential tax charge on the capital gain arising on the proposed Disposal is currently estimated to be approximately £2 million. This capital gain may be offset by any capital losses resulting from future disposals by the Continuing Group.
The net proceeds of the proposed Disposal will enable the Continuing Group to repay in full all of its remaining debt (approximately £3 million) and the remaining costs resulting from the implementation of the reorganisation of the Software Solutions Division (approximately £2 million).
As indicated above, discussions have been taking place regarding a possible disposal of the Software Solutions Division. The Board expects that the majority of the net proceeds of any disposals will be returned to shareholders in due course. In the meantime, the remaining net proceeds of the proposed Disposal will be placed on deposit.
Current trading and prospects
Since the announcement of the final results for the year ended 31 December 1999, the Group has continued to make steady progress in its reorganisation plans. The proposed Disposal represents a significant step in the Group's reorganisation announced on 30 November 1999.
Sales in the Software Solutions Division so far this year have been disappointing. This has been partly been due to the effects of the continuing reorganisation, but in addition some customers have been holding back orders until they feel assured of the long-term ownership of the business. Meanwhile, the Discovery Solutions Division has also suffered from the uncertainty of ownership. However, both divisions have managed to contain costs in line with order intake.
Board composition and Group structure
The impact of the proposed Disposal will alter the Continuing Group's operational structure and, in particular, reduce significantly the current headcount of the Group as employees of the Discovery Solutions Division are transferred to Millennium Pharmaceuticals, Inc.
As a result of, and with effect from completion of the proposed Disposal, Dr. Allan Marchington has announced his intention to resign from the Board. Dr. Allan Marchington has signed a service contract with Millennium Pharmaceuticals, Inc. which is conditional upon completion of the proposed Disposal. Given the expected reduced scale of the Group's operating activities the Board has resolved not to appoint any replacement Directors at this stage.
Other
A circular convening the Extraordinary General Meeting will be posted to shareholders shortly.
Commenting on today's announcement, Douglas Brown, Chairman of Oxford Molecular said: "The proposed Disposal of the Discovery Solutions Division is the first step in the process of delivering value for Oxford Molecular shareholders. Discussions on the future of the Software Solutions Division are ongoing and the Board hopes to be in the position to make a further announcement in the near future. The Board expects that the majority of the net proceeds of any disposals will be returned to shareholders in due course."
