BioWorld International Correspondent

LONDON - Oxford GlycoSciences plc succumbed to the hostile bid from Celltech plc that will lead to the breakup of the business, after failing to attract any better offers.

The turning point in the first bid battle in the UK biotech sector came on Friday when OGS announced it was not expecting any further bids.

That followed the withdrawal of biotechnology entrepreneurs Chris Evans and Alan Goodman, who, following completion of their due diligence, concluded, "An offer at a value in excess of that currently offered by the outstanding offer from Celltech Group plc is not a viable proposition."

The board of OGS did not immediately recommend its shareholders accept Celltech's bid of £101.4 million (US$173 million). But the announcement sparked heavy trading in OGS shares, and it later emerged that Celltech had purchased further stock to add to the 10.5 percent holding it acquired March 24. Late Monday, Celltech said it had purchased another 4.2 percent of OGS's shares, and with valid acceptances now has control over 51.4 percent of OGS.

OGS's shares fell to £1.825 on Friday, closing a shave ahead of Celltech's offer of £1.82 per share.

OGS initially had dismissed Slough-based Celltech's offer as hostile and "opportunistic," and at the beginning of April, the company, based in Abingdon, said it was in discussions with three interested parties (including Evans and Goodman) regarding a potential offer for the company. But the other two, an international pharmaceutical company and a U.S.-based biotechnology company, also declined to make a bid.

OGS's prospects were further undermined last Wednesday when it announced it was delaying the release of its annual results. The figures should have been published April 9, but the company was granted an extension until May 6.

OGS had cash of £136.4 million on Dec. 31. The reluctance of Evans/Goodman to make a higher offer than Celltech reflects OGS's cash burn of £2.5 million to £3 million per month, plus the fact that the company has expensive leasehold commitments on its facilities. In addition, OGS's proteomics database business is tied to Confirmant, a joint venture with London-based Marconi plc, a telecommunications equipment manufacturer.

Celltech said its bid will be cash-neutral.

Recommending acceptance of Celltech's offer, David Ebsworth, CEO of OGS, said, "Due to the unfortunate decline of the CAT share price, the absence of any other credible bidders and the sale of significant blocks of shares to Celltech, we feel that the only alternative is for shareholders to accept the current offer by Celltech."

The bidding for OGS was sparked Jan. 23, when Cambridge Antibody Technology Group plc, of Cambridge, announced an agreed-to all-share offer. It was worth £110 million when it was made, but the subsequent sharp fall in CAT shares so eroded the value of the offer that OGS withdrew its recommendation.