British Biotech in $80M Vernalis merger

British Biotech says it will merge with fellow UK company Vernalis in a L48 million ($80 million) deal that will give the firm a product which is already commercialized and a pro forma market capitalization of almost L91 million. The new entity will be called Vernalis, as British Biotech appears to take the opportunity to shed a name which has become tarnished in some circles by the firm's controversial history, which culminated in the well-publicized failure of its lead anticancer candidate marimastat (Marketletters passim).

The merger, which has been approved by both boards, remains subject to shareholder approval and is set to complete during the third quarter of this year. Vernalis' shareholders will control a slight majority of the new entity should they accept the offer of L0.55 per share, an 11% premium over the previous day's (July 2) closing price.

In its first full year of operations, the new concern will yield cost savings of around L6.5 million, said British Biotech in a prepared statement, adding that the merged group will also have pro forma net cash of over L48 million and superior growth opportunities than either business would have had alone.