BioWorld International Correspondent

LONDON - Oxford GlycoSciences plc withdrew its recommendation that shareholders accept Cambridge Antibody Technology Group plc's merger bid, citing the difference in value between CAT's all-share bid and the hostile cash offer of £101.4 million (US$158.8 million) from Celltech Group plc.

Despite that move, OGS CEO David Ebsworth said he believes a merger with CAT is the best option.

"The strategic benefits of a merger with CAT remain valid," he said in a letter to shareholders. The Abingdon-based company is continuing discussions with CAT in the hope of securing a better offer.

The move leaves Celltech's bid as the only one on the table. The company, based in Slough, said it was pleased OGS had withdrawn support for the CAT offer, saying the CAT bid was worth £82.9 million, or £1.49 per OGS share, compared to the Celltech offer, which is worth £1.82 per OGS share.

A major part of Ebsworth's argument in favor of CAT's bid was to give shareholders a stake in a large, well-funded biotechnology company going forward. Celltech, on the other hand, wants to transfer OGS's assets, including its £130 million cash pile, and close the company.

Encouraging OGS shareholders to accept Celltech's bid, Peter Fellner, Celltech CEO, said shareholders who wanted to continue to invest in the UK biotechnology sector, "have the option of applying their cash proceeds as they see fit."

The first closing date of Celltech's offer is March 31. It has been reported, but not confirmed, that a bid is in the offering from Immuno-Designed Molecules SA, based in Paris. The privately held company is said to be preparing a cash-and-shares offer.

CAT, based in Cambridge, made no formal comment other than to note that its extraordinary meeting last week approved the bid for OGS. The risk for CAT is that an increased offer may further depress its share price, meaning it is still not competitive with Celltech's bid.