BioWorld International Correspondent

PARIS - The shareholders of Genset SA overwhelmingly accepted the €107 million cash offer received in mid-July from Geneva-based Serono SA.

By the closing date of Sept. 12, the company's French subsidiary, Serono France Holding SA, held 85.9 percent of the capital and voting rights of Genset, or 86.6 percent on a diluted basis, taking account of all outstanding convertible bonds. The offer period now has been extended until Oct. 31 to enable the remaining holders of Genset stock to take advantage of the offer.

The bid, which was unanimously recommended by the Genset board and was for all of Genset's ordinary shares, American depositary shares, convertible bonds and warrants, was conditional on its being accepted by shareholders holding at least two-thirds of the company's voting rights.

The result was announced on Monday by the French Financial Markets Council (Conseil des Marchés Financiers), which indicated that Serono France owned the following Genset stock: 6,962,557 ordinary shares (including ADSs), representing 85.9 percent of the 8,104,850 shares outstanding; 512,390 convertible bonds exchangeable for new or existing shares (98.1 percent of the 522,223 bonds outstanding); 34,000 of 1998, 1999, 2000 and 2001 warrants (100 percent of the total); and 25,000 of 2002 warrants (100 percent).

The offer is being extended for shareholders in both France and the United States and is on the same terms as the original cash offer, namely €9.75 per share (or the equivalent in U.S. dollars, currently about US$9.45); €3.25 per ADS; and €102.64 per convertible bond.

A downsized Genset is becoming a subsidiary of Serono France, and Nick Miles, of the media relations department of Serono SA in Geneva, told BioWorld International that the process of absorbing Genset into Serono France had already started. "A couple of integration teams consisting of representatives from both companies has been set up to ensure a successful transition period," he said.

While it was "very much business as usual" at Genset's research center at Evry, south of Paris, the French company was "already in the process of closing its head office in Paris," Miles added. General management and administration are being moved to Evry, and Genset's 200-strong work force in France is to be trimmed by about 20 percent. Among the survivors will be Genset's top two corporate officers, CEO Marc Vasseur and Chief Scientific Officer Daniel Cohen, who are to remain on the Genset board in their present capacities.

Another casualty is Genset's metabolism research center in San Diego. Serono indicated at the outset that it would close that facility if it won control of Genset, but in a preemptive move the French company announced in mid-July that the center would shut down on Sept. 30, when the company's U.S. subsidiary, Genset Corp., will cease to exist. The center employs about 40 people, and all its activities, including the development of the anti-obesity drug candidate Famoxin, are to be repatriated to Evry.

Miles explained that Evry would become "Serono's center of genetics expertise" and that, although Genset will legally be part of Serono France, its researchers would report directly to Serono's global research and development center in Geneva. With worldwide revenues of $1.38 billion in 2001 (and a net income of $317 million), Serono is currently the world's third largest biotechnology company in terms of revenue.