Amersham may abandon biotech IPO plan -sources

By Ben Hirschler, European Pharmaceuticals Correspondent

LONDON, Dec 6 (Reuters) - Healthcare group Amersham Plc (LSE: AHM.L - news) may 
drop the planned flotation of its life sciences arm, which it aims to buy out 
from Pharmacia Corp , industry sources said on Wednesday.

"There are certainly benefits in terms of keeping the company together," said one.

Acquiring Pharmacia's 45 percent stake in Amersham Biosciences could cost 1.0-1.2 
billion pounds ($1.4-1.7 billion) but people familiar with the situation said the 
purchase was "viable", even without an initial public offering (IPO).

Amersham announced plans last year to float 10 percent of the Piscataway, New 
Jersey-based unit on Nasdaq but the move was put on ice due to poor market 
conditions. The UK company owns 55 percent of the operation, with Pharmacia 
holding the balance.

Since then, some of the arguments in favour of flotation -- including a desire 
to unlock shareholder value and entice staff with share options -- have faded 
as the biotech bubble has deflated.

At the same time, Amersham has strengthened its balance sheet, slashing net debt 
to 67 millions pounds at the end of September from 257 million at the end of June, 
making more substantial acquisitions possible.

Amersham Chief Executive Bill Castell said in October he was interested in Pharmacia's 
stake and is thought to view current low market values as a good opportunity to buy out 
the U.S. drugmaker.

Pharmacia is unable to sell its holding in Amersham Biosciences until April, when 
pooling restrictions following its merger with Monsanto end, but Amersham is preparing 
the ground ahead of this.

"Part of the reason they were talking about an IPO was that, when the biotech market 
was in the ascendant, there was a risk of losing people to smaller companies offering 
share options," said Michael King, an analyst at WestLB Panmure.

"That is not so much a factor now. I think the pressure is off and it is possible 
they will turn around and say there is no need to do it anymore."

Amersham spokeswoman Lynne Gailey said the company was weighing all its options.

"Amersham is going to be a long-term shareholder of Amersham Biosciences and all 
options are open at the moment. We are looking at all possibilities," she said.

Amersham first suggested a partial float of the division in March 2000, at the 
height of the boom in biotechnology stocks inspired by the mapping of the human 
genome.

The majority-owned unit was viewed as the UK firm's hottest asset since it targets 
the "gene economy" through the sale of sequencing machines and other equipment 
used to unravel genetic code.

But it makes less money that Amersham's imaging business which, although relatively 
mature, has attracted increased investor attention in this year's tougher economic 
climate.