Akzo Nobel sells unit to US company

Dutch-Swedish pharmaceutical group Akzo Nobel said on Monday that it had agreed to sell its Organon BioSciences drugs unit to US rival Schering-Plough for €11 billion ($14.4 billion).

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The cash offer by Schering-Plough was significantly higher than analysts had expected and shares in Akzo Nobel soared more than 16 percent on the Amsterdam stock exchange.

Akzo Nobel had previously planned to list Organon on the Amsterdam stock exchange through an initial public offering and had reiterated this intention last Friday. The stock market flotation was expected to raise up to €7.5 billion.

Akzo Nobel chairman Hans Wijers told journalists that Schering-Plough only contacted the company with the offer about 10 days ago and the deal was sealed on Sunday.

Asked why Schering-Plough entered so late in the game, as Akzo Nobel had already announced in 2006 that it was planning a stock market flotation, the US company's chairman Fred Hassan would only say that now was the right time.

"It was the right moment, the right fit and the right timing for Schering-Plough," he said.

Shares in Akzo Nobel were up 16.01 percent at €53.84 per share in late morning trading on the Amsterdam stock exchange.

Organon BioSciences comprises Organon, which has a leading position in gynecological drugs such as birth control pills and fertility hormone treatment, and Intervet, which develops animal health products such as pet vaccines.

The combined operations generate about €3.7 billion in annual revenues and employ 19,000 people in over 100 countries.

Akzo said the proceeds of the sale would go towards delivering on its growth ambitions and reducing pension and other liabilities. Wijers would give a figure for the pension liabilities Akzo Nobel is trying to solve in Britain other than to stress they were "substantial".

The group also said that after completion of the sale, expected in the second half of the year, it intended to buy back up to 10 percent of its issued share capital, worth about €1.3 billion, as authorized by shareholders at the April 2006 annual shareholders meeting.

"Organon BioSciences will be an excellent fit with Schering-Plough," said Hassan in a statement.

"It builds on our growing strength in primary care, giving us immediate access to central nervous system (CNS) and women's health care products."

Hassan said Monday that Organon's schizophrenia drug Asenapine was "very interesting" but would not make any projections on when that would be presented to regulators.

After the sale of Organon BioSciences, Akzo Nobel will concentrate on its chemicals and coatings division.

"Akzo Nobel aims to grow in the most attractive areas of its coatings and chemicals portfolios through investments and acquisitions," the company said.

Wijers would not name specific targets for acquisitions or even indicate if the company was looking more to coatings or to chemicals.