Assurances sought as ProStrakan chiefs back Japanese pharma bid

ProStrakan Board, 'London  - 21st Jan 2009''John Sturrock '07973 254 298
ProStrakan Board, 'London - 21st Jan 2009''John Sturrock '07973 254 298

SHAREHOLDERS of Galashiels-based ProStrakan are being recommended to endorse the sale of the pharmaceutical firm to a Japanese company.

The news follows an announcement on Monday from the boards of ProStrakan Group and Tokyo-based Kyowa Hakko Kirin (KHK) that they have reached agreement on the cash acquisition by the latter.

Under the deal, KHK will buy ProStrakan’s entire share capital for £292million, 130p a share.

This is 41 per cent higher than the closing price of 92.5p per share on November 12 last year, before the start of the Borders firm’s current offer period.

It is double the 64.9p average share price in the six months to November 12.

Despite the equity value rising markedly on the news last month that a ProStrakan drug to treat the symptoms of the male menopause could be sold in the United States, the deal is being recommended for approval by the company’s chairman and acting chief executive Peter Allan.

“The board of ProStrakan is confident this offer is in the best interests of our shareholders, staff and partners,” said Mr Allan.

“The fit between ProStrakan and KHK is unmistakable in terms of products, geography and infrastructure, and we believe the price fully values our ongoing growth prospects.

“We are enthused by KHK’s plans for the business and, in particular, its intentions regarding ProStrakan’s infrastructure in Europe and the US.”

The announcement has brought a call from local politicians for assurances that the firm remains at its base in Galashiels.

Michael Moore MP and Jeremy Purvis MSP are seeking a meeting with the new owners to clarify their long-term strategy.

“The fact that the decision to accept the bid was unanimous by the ProStrakan board is very positive along with Mr Allan’s statement that the new owners want to develop the business,” said Mr Purvis yesterday.

“Obviously, we don’t know at this stage and I don’t want to be premature and suggest the long-term future will not be in the Borders, but the firm has been very stable in Galashiels and we want that to continue.

“Both Mr Moore and I have a close relationship with the company and hope to have contact very soon, because it is a key local employer. Part of its success has been that it has developed here in the Borders.”

About 70 of ProStrakan’s 300-strong workforce are based at Wilderhaugh, developing a range of ground-breaking products. Its other main development base is in Bedminster, New Jersey, and it has marketing operations in the UK, the US and several EU countries.

ProStrakan was founded by Harry Stratford in the kitchen of his Galashiels home before moving to a disused mill in the town. In 2004, there was a merger between Scotland’s Strakan and France’s Proskelia, and the new firm flourished, although there were setbacks last year when chief executive Wilson Totten quit after six years in the job.

For the year ended December 31, 2009, ProStrakan posted a net loss of £15.8million, compared with £25.21million the previous year.

Commenting after the buy-out announcement, KHK’s president, Yazura Matsuda, stated: “We are delighted the board of ProStrakan is unanimously recommending our offer to its shareholders.

“We look forward to working with ProStrakan’s highly-skilled team to contribute to worldwide human health and wellbeing through innovative drug discovery and global commercialisation.”

KHK wa founded in 1949 and sees itself as a research and development company with core business segments in pharmaceuticals and biochemicals.

ProStrakan shareholders’ meetings are due to take place in April with the takeover deal expected to be concluded in June.