Celadon Pharmaceuticals Regulatory News (CEL)

3 Aug 2009 07:00



EMBARGOED FOR RELEASE at 7.00 a.m. on 3 August 2009

Not for release, publication or distribution in whole or in part in or into or from the United States, Canada, Australia or Japan or any other jurisdiction where it is unlawful to do so.

Recommended all cash offer

for

CELSIS INTERNATIONAL PLC

by

KBC PEEL HUNT LTD

on behalf of

NASTOR INVESTMENTS LIMITED

a company formed and controlled by funds managed by

NORTH ATLANTIC VALUE LLP

The board of Nastor Investments Limited ("Bidco"), a newly-incorporated company formed and controlled by funds managed by North Atlantic Value LLP ("NAVLLP"), and the board of Celsis are pleased to announce that they have reached agreement on the terms of a recommended all cash offer for the entire issued and to be issued share capital of Celsis not already owned by the NAV Funds.

Transaction summary

Celsis' Board's recommendation

Commenting on the Offer, Christopher Mills, Chief Investment Officer of NAVLLP and a director of Swissco and Bidco, said:

"We believe that Celsis is a good company with strong operational management. Yet the costs that it incurs in being publicly listed are relatively high for a company of its size. Therefore, we believe it will benefit from going forward as a private entity. We look forward to supporting the Company in a more cost effective corporate structure."

Commenting on behalf of the Celsis Directors, Jack Rowell, Non-executive Chairman of Celsis said:

"We see this offer of 232.5 pence as an excellent opportunity for Celsis Shareholders to realise the value of their Celsis Shares at a premium on top of the recent rise in the share price. In recent years, despite a number of years of solid growth, the Company's value has not been fully recognised by the market. We are therefore pleased to receive this offer which we believe reflects good value for our business. Accordingly, the Celsis Board recommends that the Celsis Shareholders accept this recommended cash offer."

This summary should be read in conjunction with, and is subject to the full text of the following announcement (including its Appendices). Appendix 3 to the following announcement contains definitions of certain terms used in this summary and the following announcement.

In accordance with Rule 19.11 of the City Code, a copy of this announcement will be published on the following websites: www.navalue.co.uk/site/literature/NASTOR/ and www.celsis.com/investor-relations/.

PRESS ENQUIRIES

For further information contact:

KBC Peel Hunt Ltd ("KBC Peel Hunt") which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting for Swissco and Bidco and no one else in connection with the Offer and will not be responsible to any person other than Swissco and Bidco for providing the protections afforded to clients of KBC Peel Hunt or for providing advice in relation to the Offer, the content of this announcement or any matter referred to herein.

Nomura Code Securities Limited ("Nomura Code"), which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting for Celsis and no one else in connection with the Offer and will not be responsible to any person other than Celsis for providing the protections afforded to clients of Nomura Code or for providing advice in relation to the Offer, the content of this announcement or any matter referred to herein.

This announcement does not constitute, or form part of, any offer for, or any solicitation of any offer for, securities. Any response to the Offer should be made only on the basis of information referred to in the Offer Document which Bidco intends to despatch shortly to Celsis Shareholders and, for information only, to holders of options under the Celsis Share Schemes.

The availability of the Offer to persons who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction in which they are located. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction. Any failure to comply with these requirements may constitute a violation of the securities laws at any such jurisdiction. Further details in relation to overseas shareholders will be contained in the Offer Document.

The Offer referred to in this announcement will not be made available directly or indirectly, in, into or by use of the mails of, or by any means or instrumentality (including, without limitation, telephonically or electronically) or interstate or foreign commerce of, or any facilities of a nationals securities exchange of, the United States, Canada, Australia or Japan or any other jurisdiction if to do so would constitute a violation of the relevant laws of such jurisdiction. This announcement does not constitute an offer in the United States, Canada, Australia or Japan or any such other jurisdiction and the Offer will not be made available by any such use, means, instrumentality or facilities or otherwise from or within the United States, Canada, Australia or Japan or any such other jurisdiction. Accordingly this announcement is not being, and should not be, mailed, transmitted or otherwise distributed, in whole or in part, in or into or from the United States, Canada, Australia or Japan or any such other jurisdiction.

CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

This announcement contains certain forward looking statements with respect to the financial condition, results of operations and business of Celsis, the Offer and certain plans and objectives of the boards of directors of Celsis, Swissco and Bidco. These forward looking statements can be identified by the fact that they do not relate to historical or current facts. Forward looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the boards of directors of Celsis, Swissco and Bidco in the light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. By their nature, forward looking statements involve risk and uncertainty and the factors described in the context of such forward looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward looking statements. 

Although the boards of Celsis, Swissco and Bidco believe the expectations in such forward-looking statements are reasonable, should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this announcement. The boards of Celsis, Swissco and Bidco assume no obligation to update or correct the information contained in this announcement.

DEALING DISCLOSURE REQUIREMENTS

Under the provisions of Rule 8.3 of the Code, if any person is, or becomes, "interested" (directly or indirectly) in 1% or more of any class of "relevant securities" of Celsis, all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Celsis, they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of Celsis by Swissco, Bidco or by any of their respective "associates", must be disclosed by not later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel on telephone number +44(0)20 7382 9062 or fax number +44(0)20 7638 1554.

Rule 2.10 Disclosure

In accordance with Rule 2.10 of the City Code, the current issued share capital of Celsis comprises 21,892,528 ordinary shares of 5 pence each all of which are admitted to trading on the main market of London Stock Exchange under the UK ISIN Code GB00B0CD5F69.

EMBARGOED FOR RELEASE at 7.00 a.m. on 3 August 2009

Not for release, publication or distribution in whole or in part in or into or from the United States, Canada, Australia or Japan or any other jurisdiction where it is unlawful to do so.

Recommended all cash offer 

for

CELSIS INTERNATIONAL PLC

by

KBC PEEL HUNT LTD

on behalf of

NASTOR INVESTMENTS LIMITED

a company formed and controlled by funds managed by

NORTH ATLANTIC VALUE LLP

1. Introduction

The board of Nastor Investments Limited ("Bidco"), a newly-incorporated company formed and controlled by funds managed by North Atlantic Value LLP ("NAVLLP"), and the board of Celsis are pleased to announce that they have reached agreement on the terms of a recommended all cash offer by Bidco for the entire issued and to be issued share capital of Celsis not already owned by the NAV Funds.

NAVLLP is a UK limited liability partnership, which is authorised to conduct investment business by the Financial Services Authority. The principal activity of NAVLLP is to provide discretionary investment management and advisory services in respect of its active value and private equity clients. NAVLLP currently has total funds under management of approximately £506 million.

2. The Offer

Under the terms of the Offer, which will be subject to the Conditions and certain further terms set out in Appendix 1 and to be set out in full in the formal Offer Document, Celsis Shareholders will receive:

The Offer values the entire issued and to be issued share capital of Celsis at approximately £54.5 million.

The Offer Price represents a premium of:

Celsis Shares will be acquired by Bidco pursuant to the Offer fully paid and free from all liens, equities, charges, equitable interests, encumbrances, rights of pre-emption and other third party rights and/or interests of any nature whatsoever and together with all rights attaching to them, now or in the future, including the right to receive and retain all dividends, interest and other distributions declared, paid or made in the future.

The Offer Document, containing further details of the Offer together with the Form of Acceptance, will be posted to Celsis Shareholders and, for information only, to participants in the Celsis Share Schemes as soon as practicable and in any event within 28 days from the date of this announcement, unless otherwise agreed with the Panel. 

3. Background to and reasons for the Offer

Celsis is a leading supplier of innovative life science products and laboratory services to the global pharmaceutical and consumer products industries, with a well-regarded brand and strong sector expertise. Its three divisions provide products and services for the rapid detection of microbial contamination in products, cost effective outsourced laboratory testing services and cellular products used to screen drug compounds for toxicity and drug interactions. This package of products and services allows Celsis to deliver significant value to its customers by reducing the time and the cost of a number of their key processes.

Bidco is a newly incorporated investment vehicle set up for the purposes of the Offer and is acting in concert with Swissco, NAVLLP, Christopher Mills and the NAV Funds. Of the NAV Funds, NASCIT currently holds 2,850,893 Celsis Shares and Oryx currently holds 1,500,000 Celsis Shares. Accordingly the NAV Funds hold in aggregate 4,350,893 Celsis Shares representing approximately 19.9 per cent. Of the Company's issued share capital.

If the Offer becomes unconditional in all respects, Bidco will act as a holding company and does not intend to actively participate in the operational management of Celsis' business. Bidco's intention is to ensure that the Celsis Group is adequately capitalised and structured to enable it to achieve growth in the longer term.

Subject to the Offer becoming unconditional in all respects, it is the intention of Bidco to delist Celsis and re-register it as a private company. This will both save the costs incurred with the listing and give Celsis the flexibility to make more significant changes to the strategy and structure of the Company than may be possible and appropriate for a listed company.

Bidco believes that Celsis is better suited to a private company environment which, in its opinion, would enable the more efficient delivery of management's business plan, of which Bidco is fully supportive, and would allow the Company's business to be grown profitably, within a simplified and more cost and tax efficient corporate structure. Bidco has confirmed that it intends to continue to grow Celsis' revenue. Bidco has plans to transfer certain IP rights held within the Celsis Group to a group company to be established in Switzerland, but otherwise has no current intention to redeploy any of the fixed assets of the Celsis Group.

4. Background to and reasons for recommending the Offer

The Celsis Directors believe that in the current economic climate, listed companies with relatively small market capitalisations find it difficult to attract research coverage or genuine stock liquidity and that the Offer would enable shareholders to realise value from the investment in the Company. In particular, the Celsis Directors believe that if Celsis was to remain independent, it is unlikely that its share price would exceed the level of the consideration under the Offer in the near future.

The NAV Funds have purchased approximately 4.35 million Celsis Shares in the market (approximately 19.9 per cent. of the Company's issued share capital). The interest of the NAV Funds in Celsis Shares was first announced on 17 October 2008 following the acquisition of 50,000 Celsis Shares which took its holding to approximately 1.55 million Celsis Shares and, since that announcement, the NAV Funds have acquired approximately a further 2.8 million Celsis Shares. Without the support provided by the purchase in the market of these Celsis Shares by the NAV Funds, the Celsis Directors believe that Celsis' share price would have been more strongly impacted in line with the downturn in the wider markets.

Subsequently the NAV Funds approached the board of Celsis with a view to making an offer for its entire issued share capital. After careful consideration of the terms in conjunction with its advisers, the Celsis Directors are recommending Bidco's offer to acquire the Company.

In deciding to recommend the Offer, the directors of Celsis have taken into account a number of factors, including the following:

On the basis of these and such other factors as the Celsis Directors considered relevant, the Celsis Directors have concluded that the terms of the Offer are fair and reasonable and should be recommended to shareholders.

5. Financing of the Offer

The Offer will be funded out of Bidco's committed cash resources and banking facilities. 

As required by the City Code, KBC Peel Hunt, as financial adviser to Bidco, has confirmed that it is satisfied that sufficient resources are available to Bidco to satisfy in full the cash consideration payable to Celsis Shareholders under the terms of the Offer. 

6. Recommendation

The Celsis Directors, who have been so advised by Nomura Code, consider the terms of the Offer to be fair and reasonable. In providing its advice to the Celsis Directors, Nomura Code has taken into account the commercial assessments of the Celsis Directors.

Accordingly, the Celsis Directors intend unanimously to recommend that Celsis Shareholders accept the Offer as they have themselves irrevocably undertaken to do (or procure to be done) in respect of their entire beneficial holdings of Celsis Shares amounting to, in aggregate, 219,335 Celsis Shares, representing approximately 1.0 per cent. Of Celsis' existing issued share capital. 

7. Irrevocable undertakings and letters of intent

Bidco has received irrevocable undertakings to accept the Offer in respect of 2,807,719 Celsis Shares in aggregate, representing approximately 12.8 per cent. Of the existing issued share capital of Celsis, as follows:

The irrevocable undertakings received from the Celsis Directors referred to above shall lapse, inter alia, if a third party makes an offer for the entire issued share capital of Celsis at a price which, in the reasonable opinion of the Celsis Directors, having been so advised by Nomura Code, exceeds the value of the Offer by more than 10 per cent. And which the Celsis Directors wish to recommend.

The irrevocable undertakings signed by Rights & Issues Investment Trust Plc and Gartmore Investment Management Limited referred to above will lapse, inter alia, if (i) the Offer Document is not posted within 28 days of the date of this announcement; (ii) the Offer is withdrawn or lapses; or (iii) if, at any time, a third party or parties makes or announces a firm intention to make an offer for the entire issued share capital of the Company at 240 pence per Celsis Share or higher.

In addition, Bidco has received non-binding letters of intent to accept the Offer in respect of 1,336,150 Celsis Shares in aggregate, representing approximately 6.1 per cent. Of the entire issued share capital of Celsis from the following parties:

The letters of intent signed by Discretionary Unit Fund Managers Ltd and Cavendish Asset Management Limited referred to above will lapse, inter alia, if (i) the Offer Document is not posted within 28 days of the date of this announcement; (ii) the Offer is withdrawn or lapses; or (iii) if, at any time, a third party or parties makes or announces a firm intention to make an offer for the entire issued share capital of the Company at 240 pence per Celsis Share or higher.

Taking into account the Celsis Shares held by the NAV Funds and the irrevocable undertakings and letters of intent referred to in this paragraph 7, the Offer is therefore supported by Celsis Shareholders holding in aggregate, 8,494,762 Celsis Shares representing approximately 38.8 per cent. Of the existing issued share capital of Celsis.

8. Holdings of the NAV Funds

NASCIT and Oryx currently hold in aggregate 4,350,893 Celsis Shares, representing approximately 19.9 per cent of the existing issued share capital of Celsis. NASCIT and Oryx have agreed to transfer their Celsis Shares to Bidco in exchange for an issue of ZRP Shares after Bidco has received sufficient acceptances to take its aggregate holding in Celsis, when aggregated with the shares held by NASCIT and Oryx, to over 50 per cent. Of the issued Celsis Shares. The ZRP Shares will be issued on the basis of 93 ZRP Shares for every Celsis Share held and therefore entitle their holders to the receipt of the same cash consideration of 232.5 pence per Celsis Share as is available under the Offer, but on deferred terms.

9. Information on Celsis

Celsis is a leading international provider of innovative life science products and laboratory services to the global pharmaceutical and consumer products industries with turnover for the 12 months ended 31 March 2009 of US$52.5 million. The company is organised into three divisions, Rapid Detection, Analytical Services and In Vitro Technologies. Through these three divisions, Celsis provides the pharmaceutical and consumer market with diagnostic systems for the rapid detection of microbial contamination in products, cost effective outsourced laboratory testing services and cellular products used to screen drug compounds for toxicity and drug interactions. Celsis employs approximately 230 people, operating in North America, the UK and Continental Europe.

10. Current Trading and Prospects of Celsis

On 21 July 2009, Celsis held its Annual General Meeting and provided its Interim Management Statement. Dr Jack Rowell, Non-Executive Chairman of Celsis, made the following comments:

"The year ended 31 March 2009 was another successful year for Celsis. We reported strong profit growth in what has been a challenging economic environment, with operating profit increasing 17.9% to $13.2 million while sustaining revenues at $52.5 million. We have again demonstrated the strength of our business model by successfully streamlining our product and laboratory services offerings to meet the growing needs of our pharmaceutical and consumer product customer base, while considerably improving the profitability of our continuing business. 

"The Rapid Detection business, which provides testing systems to more rapidly detect microbial contamination, had a slow start to the quarter, but has regained momentum in June with strong instrument sales. However, trading results year-to-date are behind last year. This division continues to address the market demand for rapid microbial testing in the pharmaceutical and consumer product industries, while amplifying new market opportunities with its latest Celsis ReACTTM technology. 

"The Analytical Services business, which provides outsourced laboratory testing services, has seen sustained trading in the first quarter. With the newly structured management and business development teams established, we remain confident in the resilience of this increasingly efficient, customer focused business. 

"The In Vitro Technologies business, which provides products to help reduce the time and cost of the drug discovery and development process, has experienced a slow down in trading, particularly in Europe, and is significantly behind last year as the pharmaceutical industry continues to realign itself following recent consolidations and R&D spending reductions. We expect this business to benefit from the newly expanded international distribution agreements during this fiscal year. 

"Despite a challenging first quarter, we are confident that the Group is well positioned in the current economic environment to benefit from disciplined investment in product innovation as well as targeted sales and marketing. 

"I would like to conclude by thanking our new and existing shareholders for their continued support and confidence in Celsis."

There has been no material change in the trading or prospects of Celsis since that date.

11. Information on NAVLLP, the NAV Funds, Swissco and Bidco

NAVLLP is a UK limited liability partnership, which is authorised to conduct investment business by the Financial Services Authority.

The principal activity of NAVLLP is to provide discretionary investment management and advisory services in respect of its active value and private equity clients. NAVLLP currently has total funds under management of approximately £506 million. Further information concerning the NAV Funds will be set out in the Offer Document.

Swissco was incorporated on 9 July 2009 in Zug, Switzerland by NAVLLP (on behalf of the NAV Funds) for the purposes of the Offer. The entire issued share capital of Swissco is held by the NAV Funds. The directors of Swissco are Christopher Mills, Chief Investment Officer of NAVLLP, Jeremy Brade, a Senior Fund Manager of NAVLLP, and Dr Heinz Klarer, a Swiss lawyer.

Bidco was incorporated on 10 July 2009 in England by NAVLLP for the purpose of making the Offer. Bidco is a wholly owned subsidiary of Swissco. Bidco will be funded by preference share capital provided by the NAV Funds and by loan facilities provided by KBC Bank. The directors of Bidco are Christopher Mills and Jeremy Brade. 

12. Celsis Share Schemes 

Appropriate proposals will be made to holders of options under the Celsis Share Schemes in due course. Details of these proposals will be set out in the Offer Document.

13. Compulsory acquisition, cancellation of listing and admission to trading and re-registration

If Bidco receives acceptances under the Offer in respect of, and/or otherwise acquires not less than 90 per cent. Of the Celsis Shares to which the Offer relates and not less than 90 per cent. Of the voting rights carried by those shares and assuming that all of the other conditions of the Offer have been satisfied or waived (if capable of being waived), Bidco intends to exercise its rights pursuant to the provisions of Chapter 3 of Part 28 of the Companies Act 2006 to acquire compulsorily the remaining Celsis Shares on the same terms as the Offer.

Assuming Bidco receives acceptances under the Offer in respect of, and/or otherwise acquires, Celsis shares carrying 75 per cent. Or more of the voting rights then normally exercisable at general meetings of Celsis, Bidco intends to procure the making of an application by Celsis to the FSA for the listing of the Celsis Shares on the Official List to be cancelled and to the London Stock Exchange for the admission to trading of Celsis Shares to be cancelled. The delisting of the Celsis Shares will require the consent of the Celsis Shareholders. This may be provided by a resolution passed at the relevant time by a 75 per cent. Majority of those voting at a general meeting of Celsis or, without the need for such a meeting, if Bidco has acquired the relevant number of Celsis Shares by means of the Offer or otherwise. If this cancellation occurs, it will significantly reduce the liquidity and marketability of Celsis Shares not assented to the Offer.

It is also proposed that following the receipt of acceptances under the Offer in respect of, and/or otherwise the acquisition of, Celsis Shares carrying 75 per cent. Or more of the voting rights then normally exercisable at general meetings of Celsis and after the delisting of Celsis Shares, Celsis will be re-registered as a private company.

14. Directors, management and employees

Bidco has confirmed to the Celsis Directors that, following the Offer becoming or being declared wholly unconditional, it has no intention of changing the existing employment rights, terms and conditions of the employees of the Celsis Group and it intends that Celsis' pension obligations will be complied with. Bidco's plans do not involve any material change in the conditions of employment of the employees of the Celsis Group, nor are there any plans to change the principal locations of the Celsis Group's business and, accordingly, the Celsis Directors believe that the prospects of the employees of Celsis will not be adversely affected by the Offer. 

Jack Rowell, Christopher Evans and Jeremy Barnes have agreed to resign on the Offer becoming or being declared wholly unconditional. Jay LeCoque and Christian Madrolle will remain on the board and will be joined by Christopher Mills and Jeremy Brade as representatives of NAVLLP.

If the Offer becomes unconditional in all respects, it is intended that Bidco will enter into an agreement with Celsis for the provision of the services of Christopher Mills and Jeremy Brade as directors of Celsis and to provide additional consultancy and strategic advisory services to Celsis at an aggregate fee of £50,000 per annum which will be subject to annual review.

Save as disclosed in this announcement, the effect of the Offer on the interests of the Celsis Directors will not differ from their effect on the interests of any other Celsis Shareholder.

15. Disclosure of interests in Celsis

Save for the Celsis Shares specified in the irrevocable undertakings and letters of intent referred to in paragraph 7 above and those Celsis Shares referred to in paragraph 8 above, as at the close of business on 31 July 2009, being the latest practicable business day prior to the date of this announcement, neither Bidco, any of the Bidco Directors, their immediate families or related trusts, nor so far as Bidco is aware any party acting in concert with Bidco, had any interest in or right to subscribe in respect of any relevant securities of Celsis or had any short positions in respect of relevant securities of Celsis, or had borrowed or lent any relevant security of Celsis.

16. Inducement Fee Agreement

Celsis has entered into an inducement fee agreement with NAVLLP, for the benefit of Bidco, under which Celsis has given various undertakings to NAVLLP and Bidco, including an undertaking that it will not directly or indirectly solicit or initiate the submission of any proposal or offer from any other person relating to a possible offer for Celsis or the whole or a substantial part of its undertaking. 

As an inducement to NAVLLP and Bidco to pursue their due diligence enquiries of Celsis in relation to a possible offer, Celsis has agreed under the inducement fee agreement to pay an inducement fee to Bidco of one per cent. Of the value of Celsis, based on the Offer Price (inclusive of any recoverable VAT), calculated on a fully diluted basis. The inducement fee will be payable if:

Celsis shall notify NAVLLP of any approach from a third party with a view to a competing offer for the entire issued share capital of Celsis. 

If Celsis receives an approach relating to a competing proposal which the Celsis Directors intend to recommend instead of the Offer, Celsis shall notify Bidco following receipt of the same and shall provide Bidco with a period of 48 hours to confirm that it is willing to revise the terms of the Offer such that the Celsis Directors determine to continue to recommend the Offer (as revised). The Celsis Directors will not recommend the competing proposal during this 48 hour period and, provided that Bidco confirms that it is willing to revise the terms of the Offer during this period such that the Celsis Directors determine to continue to recommend the Offer, the Celsis Directors will not recommend the competing proposal for a further 48 hour period. If Bidco has not announced the revised Offer within 96 hours of the initial notification of the competing proposal from Celsis, the Celsis Directors may recommend the competing proposal.

17. Overseas shareholders

The availability of the Offer or the distribution of this announcement to persons who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are located. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements. 

This announcement does not constitute an offer for sale of any securities or an offer or an invitation to purchase any securities. Celsis Shareholders are advised to read carefully the Offer Document and related Form of Acceptance once these have been dispatched.

18. General

Appendix 3 contains definitions of the terms used in this announcement.

In accordance with Rule 19.11 of the City Code, a copy of this announcement will be published on the following websites: www.navalue.co.uk/site/literature/NASTOR/ and www.celsis.com/investor-relations/.

19. Press enquiries

For further information contact:

KBC Peel Hunt Ltd ("KBC Peel Hunt") which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting for Swissco and Bidco and no one else in connection with the Offer and will not be responsible to any person other than Swissco and Bidco for providing the protections afforded to clients of KBC Peel Hunt or for providing advice in relation to the Offer, the content of this announcement or any matter referred to herein.

Nomura Code Securities Limited ("Nomura Code"), which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting for Celsis and no one else in connection with the Offer and will not be responsible to any person other than Celsis for providing the protections afforded to clients of Nomura Code or for providing advice in relation to the Offer, the content of this announcement or any matter referred to herein.

This announcement does not constitute, or form part of, any offer for, or any solicitation of any offer for, securities. Any response to the Offer should be made only on the basis of information referred to in the Offer Document which Celsis intends to despatch shortly to Celsis Shareholders and, for information only, to holders of options under the Celsis Share Schemes.

The availability of the Offer to persons who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction in which they are located. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction. Any failure to comply with these requirements may constitute a violation of the securities laws at any such jurisdiction. Further details in relation to overseas shareholders will be contained in the Offer Document.

The Offer referred to in this announcement will not be made available directly or indirectly, in, into or by use of the mails of, or by any means or instrumentality (including, without limitation, telephonically or electronically) or interstate or foreign commerce of, or any facilities of a nationals securities exchange of, the United States, Canada, Australia or Japan or any other jurisdiction if to do so would constitute a violation of the relevant laws of such jurisdiction. This announcement does not constitute an offer in the United States, Canada, Australia or Japan or any such other jurisdiction and the Offer will not be made available by any such use, means, instrumentally or facilities or otherwise from or within the United States, Canada, Australia or Japan or any such other jurisdiction. Accordingly this announcement is not being, and should not be, mailed, transmitted or otherwise distributed, in whole or in part, in or into or from the United States, Canada, Australia or Japan or any such other jurisdiction.

CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

This announcement contains certain forward looking statements with respect to the financial condition, results of operations and business of Celsis, the Offer and certain plans and objectives of the boards of directors of Celsis, Swissco and Bidco. These forward looking statements can be identified by the fact that they do not relate to historical or current facts. Forward looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the boards of directors of Celsis, Swissco and Bidco in the light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. By their nature, forward looking statements involve risk and uncertainty and the factors described in the context of such forward looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward looking statements. 

Although the boards of Celsis, Swissco and Bidco believe the expectations in such forward-looking statements are reasonable, should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this announcement. The boards of Celsis, Swissco and Bidco assume no obligation to update or correct the information contained in this announcement.

DEALING DISCLOSURE REQUIREMENTS

Under the provisions of Rule 8.3 of the Code, if any person is, or becomes, "interested" (directly or indirectly) in 1% or more of any class of "relevant securities" of Celsis, all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the Offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "Offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Celsis, they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of Celsis by Swissco, Bidco or by any of their respective "associates", must be disclosed by not later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel on telephone number +44(0)20 7382 9062 or fax number +44(0)20 7638 1554.

Rule 2.10 Disclosure

In accordance with Rule 2.10 of the City Code, the current issued share capital of Celsis comprises 21,892,528 ordinary shares of 5 pence each all of which are admitted to trading on the main market of London Stock Exchange under the UK ISIN Code GB00B0CD5F69.

APPENDIX 1

Conditions and Certain Further Terms of the Offer

A.  Conditions

The Offer shall be subject to the following Conditions and further terms: 1. Acceptances

Valid acceptances being received (and not, where permitted, withdrawn) by no later than 1.00 pm (London time) on the first closing date of the Offer (or, subject to the Code, such later time(s) and/or dates(s) as Bidco may decide) in respect of such number of Celsis Shares which, together with Celsis Shares acquired or agreed to be acquired before or during the Offer Period, will result in Bidco holding Celsis Shares carrying more than 50 per cent of the voting rights then normally exercisable at general meetings of Celsis including, for this purpose, to the extent (if any) required by the Code, the voting rights attaching to any Celsis Shares which may be unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances. In this condition:

2. Authorisations

3. Regulatory Intervention

No relevant person having taken, instituted, implemented or threatened any legal proceedings, or having required any action to be taken or otherwise having done anything or having enacted, made or proposed any statute, regulation, order or decision or taken any other step and there not continuing to be outstanding any statute, regulation, order or decision that would or might reasonably be expected to:

and all applicable waiting and other time periods during which any such relevant person could institute, or implement or threaten any legal proceedings, having expired, lapsed or been terminated. 4. Consequences Of the Offer

Save as Disclosed there being no provision of any agreements to which any member of the Wider Celsis Group is a party, or by or to which any such member, or any part of its assets, may be bound, entitled or subject, which would or might, in each case as a consequence of the Offer or of the acquisition or proposed acquisition of all or any part of the issued share capital of, or change of control or management of, Celsis or any other member of the Wider Celsis Group reasonably be expected to result (in each case to an extent which is material to Bidco in the context of the Offer or, as the case may be, in the context of the Wider Celsis Group taken as a whole) in:

and no event having occurred which, under any provision of any such agreement to which any member of the Wider Celsis Group is a party, or by or to which any such member, or any of its assets, may be bound, entitled or subject, could result to an extent which is material to Bidco in the context of the Offer or, as the case may be, in the context of the Wider Celsis Group taken as a whole in any of the events or circumstances as are referred to in subparagraphs (a) to (i) inclusive.

5. No Corporate Action Taken Since The Accounting Date

Since the Accounting Date, save as otherwise Disclosed pursuant to transactions in favour of Celsis or a whollyߛowned subsidiary of Celsis, no member of the Wider Celsis Group having:

6. Other Events Since the Accounting Date

In the period since the Accounting Date save as Disclosed:

7. Environmental and Other Issues

Save as Disclosed, Bidco not having discovered that:

Environmental

Information

Accounts

B. Certain Further Terms of the Offer

The Conditions are inserted for the benefit of Bidco and no Celsis Shareholder shall be entitled to waive any of the Conditions without the prior consent of Bidco.

Subject to the requirements of the Panel, Bidco reserves the right to waive all or any of the above Conditions, in whole or in part except Condition 1. Bidco shall be under no obligation to waive (if capable of waiver) to determine to be or remain satisfied or to treat as fulfilled any of Conditions 2 to 7 inclusive by a date earlier than that date specified in Condition 1 for the fulfilment thereof.

If the Offer lapses, it will cease to be capable of further acceptance and persons accepting the Offer and Bidco shall thereupon cease to be bound by acceptances submitted before the time the Offer lapses.

The Offer will lapse unless all of the conditions relating to the Offer have been fulfilled or (if capable of waiver) waived by, or, where appropriate, have been determined by Bidco to be and remain satisfied by, midnight on the twenty first day after the later of:

or such later date as Bidco may, with the consent of the Panel, decide. Bidco shall be under no obligation to waive or treat as satisfied any condition by a date earlier than the latest date specified above for its satisfaction even though the other conditions of the Offer may, at such earlier date, have been waived or fulfilled and there are, at such earlier date, no circumstances indicating that any such conditions may not be capable of fulfilment.

If the Panel requires Bidco to make an offer or offers for any Celsis Shares under the provisions of Rule 9 of the City Code, Bidco may make such alterations to the Conditions of the Offer as are necessary to comply with the provisions of that Rule.

The Offer will be on the terms and will be subject to, inter alia, to the Conditions which are set out in the Part A of this Appendix I and those terms which will be set out in the formal Offer Document and related Forms of Acceptance and such further terms as may be required to comply with the Listing Rules and the provisions of the City Code.

The Offer will lapse and will not proceed if the proposed acquisition of Celsis is referred to the Competition Commission or (unless the Panel otherwise consents) if the European Commission initiates proceedings under Article 6(1)(c) of the Regulation or makes a referral to the competent authority of the United Kingdom under Article 9(1) of the Regulation before 1:00pm on the first closing date or the time and date on which the Offer becomes or is declared unconditional as to acceptances (whichever is later).

The Offer will be governed by English law and will be subject to the jurisdiction of the English courts.

The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

Each of Conditions 1 to 7 shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

APPENDIX 2

Sources and Bases of Information

APPENDIX 3

Definitions

The following definitions apply throughout this announcement unless the context requires otherwise: