EXHIBIT 10.1
FOR IMMEDIATE RELEASE
IVAX AND HAFSLUND NYCOMED ANNOUNCE MERGER OF EQUALS FORMING
NEW MULTI-NATIONAL, HEALTH CARE PRODUCTS COMPANY
SUMMARY
IVAX (Miami, Florida), the world's largest generic drug company, and Hafslund
Nycomed (Oslo, Norway), the world's largest diagnostic imaging contrast agent
company, today announced the proposed merger of their complementary health care
businesses. This new company, IVAX NYCOMED CORPORATION, will have an estimated
combined market capitalization of $6.5 billion and will employ over 13,000
people worldwide.
THE MERGER
bullet IVAX NYCOMED unites world leaders in generic pharmaceuticals and
diagnostic imaging contrast media, creating a powerful force in the
research, development, manufacturing and marketing of innovative and
affordable health care products.
bullet IVAX NYCOMED will direct, on a coordinated, global scale, a generic
drug program that is the largest in the world, and a powerful hospital
products program led by a diagnostic imaging contrast media business
with a leading position in the $3.3 billion contrast media industry.
bullet Phillip Frost, Chairman and CEO of IVAX, will become Executive
Chairman of IVAX NYCOMED. Svein Aaser, President and CEO of Hafslund
Nycomed, will become President and CEO. IVAX and Hafslund Nycomed
directors will have equal representation on the new Board of Directors.
bullet The management expects that the combination of IVAX and Hafslund
Nycomed will result in a company with combined 1995 revenues in excess
of $2.5 billion, a stronger balance sheet, significantly greater cash
flow from operations, and more predictable and more stable earnings.
bullet Shareholders of IVAX and Hafslund Nycomed will receive shares in the
merged IVAX NYCOMED on a 1:1 exchange basis. Hafslund Nycomed's energy
business will be separated from the combined health care products
company. Pending stockholder and regulatory approvals, closing is
expected in the first half of 1996.
BENEFITS OF THE MERGER
bullet The resulting company will be by far the largest generic drug company
in the world. It will offer a broad generic drug portfolio, a selection
of branded drugs, and an array of products featuring specialized drug
delivery technologies.
bullet Hafslund Nycomed's leading position in the contrast media segment of
the diagnostic imaging business will be augmented by IVAX's intravenous
solutions products, giving the new company a broader and more
competitive product portfolio.
bullet Manufacturing efficiencies, improved productivity and cost savings
through coordinated sourcing of raw materials and packaging components.
bullet Strengthened R&D capacity in both pharmaceuticals and diagnostic
imaging. The integration and scale of the combined R&D program, and the
greater resources available to it, are expected to improve the
company's new drug development success rate and R&D efficiencies.
bullet Substantial synergies, principally from improved marketing and
distribution channels, expected to account for an incremental yearly
pre-tax contribution of $100 million by the third year of operation.
Phillip Frost, M.D., IVAX' Chairman and CEO, said of the merger, "IVAX and
Hafslund Nycomed - both pioneers and world leaders in their respective
industries - will be combined into one unified, powerful company with the
financial strength, product base, global reach, and the scientific and technical
expertise necessary to excel in the rapidly changing and ever competitive health
care industry. Together, we will be committed to one goal: providing superior
health care products that meet the needs of patients, payors and society
worldwide, by maintaining leadership positions in diagnostic imaging products
and generic pharmaceuticals and developing and marketing hospital and innovative
pharmaceutical products in targeted therapeutic areas. We will meet these needs
in two ways: by providing high quality, affordable generic pharmaceuticals which
provide patients and payors with a lower cost alternative to existing therapies,
and by providing innovative products that either fill important therapeutic or
diagnostic voids, or that represent significant advances over existing
products."
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Svein Aaser, Hafslund Nycomed's President and CEO, offered his view of the
combination: "The merger presents tremendous opportunities to enhance revenues
through the registration and sale of IVAX' generic drugs in markets where
Hafslund Nycomed is strong, particularly in the Nordic countries. The alliance
of Hafslund Nycomed's world-leading contrast media business with IVAX'
intravenous solutions business, which will permit both businesses to reap the
benefits of our excellent global hospital relationships and complementary
product lines, will enhance revenues as well. In addition, we will marry our
leading research and development programs to produce the largest and most
prolific generic drug and contrast imaging development programs in the world.
Although we will enjoy cost savings in the process, we are not so much trimming
fat as we are adding lean muscle, and we will emerge as a dynamic new health
care products company that is far stronger than its constituent parts -- and far
stronger than its competitors."
This merger of equals transaction will be treated as a pooling-of-interests
under both U.S. and Norwegian accounting standards. Dr. Phillip Frost and Mr.
Terje Mikalsen, the Chairman and largest individual shareholders of IVAX and
Hafslund Nycomed, respectively, have agreed to vote their shares in favor of the
merger. Merrill Lynch, financial advisor to Hafslund Nycomed, assisted in all
aspects of the negotiations, and rendered a fairness opinion to the Board of
Directors of Hafslund Nycomed. The Board of Directors of IVAX received an
opinion from Dillon Read & Co. Inc. as to the fairness of the merger.
NOTES TO EDITORS
IVAX is a holding company with subsidiaries involved in generic and branded
pharmaceuticals, intravenous solutions and related products, medical
diagnostics, personal care products, and specialty chemicals.
Hafslund Nycomed is primarily engaged in the R&D, production, distribution and
licensing of medical imaging contrast media, a broad range of prescription and
OTC therapeutic drugs, and in the generation and transmission of hydroelectric
power.
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ENQUIRIES:
IVAX
Michael W. Fipps, Chief Financial (1) 305-590 2318
Officer
Joseph Jones, Investor Relations (1) 305-590-2423
Armando A. Tabernilla, General (1) 305-590 2401
Counsel
HAFSLUND NYCOMED
Eric Cameron, Corporate (47) 2296-3449
Communications
Alex Gundersen, Investor Relations (47) 2296-3483
FINSBURY
Rupert Younger (44) 171 251-3801
Roland Rudd (44) 171 251-3801
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FULL TEXT
IVAX AND HAFSLUND NYCOMED
ANNOUNCE MERGER OF EQUALS FORMING NEW
MULTI-NATIONAL HEALTH CARE PRODUCTS COMPANY
bullet STRATEGIC $6.5 BILLION TRANSACTION UNITES WORLD LEADERS IN
GENERIC PHARMACEUTICALS AND DIAGNOSTIC IMAGING CONTRAST MEDIA.
bullet MERGER CREATES POWERFUL GLOBAL HEALTH CARE PRODUCTS COMPANY
WITH STRONG BALANCE SHEET AND CASH FLOW FROM DIVERSIFIED
REVENUE SOURCES.
bullet LEADING GENERICS BUSINESS: MERGER STRENGTHENS WORLD'S LARGEST
GENERIC DRUG COMPANY; CREATES WORLD'S MOST COMPREHENSIVE
GENERIC DRUG DEVELOPMENT PROGRAM; BROADENS GENERIC DRUG
PORTFOLIO; CREATES WORLD'S LARGEST GENERIC DRUG DISTRIBUTION
NETWORK.
bullet STRONG HOSPITAL PRODUCTS BUSINESS: STRONG HOSPITAL PRODUCTS
COMPANY LED BY WORLD'S LARGEST IMAGING CONTRAST MEDIA COMPANY
AND ESTABLISHED INTRAVENOUS SOLUTIONS BUSINESS; EXTENSIVE
HOSPITAL DISTRIBUTION CHANNELS IN PLACE; INNOVATIVE PRODUCTS
IN DEVELOPMENT.
bullet COMPLEMENTARY GEOGRAPHIC STRENGTHS AND COORDINATED GLOBAL
MARKETING AND DISTRIBUTION NETWORKS.
bullet TARGETED R&D PROGRAMS FOR INNOVATIVE DRUGS AND DIAGNOSTIC
IMAGING PRODUCTS; ADVANCED PIPELINE IN IMPORTANT THERAPEUTIC
AREAS.
bullet IVAX AND HAFSLUND NYCOMED SHAREHOLDERS EXCHANGE SHARES ON A
1:1 BASIS; HAFSLUND NYCOMED ENERGY BUSINESS NOT INCLUDED IN
COMBINED HEALTHCARE COMPANY; CLOSING EXPECTED IN FIRST HALF
1996.
MIAMI, FLORIDA and OSLO, NORWAY - October 18, 1995. IVAX Corporation
(AMEX:IVX) and Hafslund Nycomed Corporation (NYSE:HN) today jointly announced
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the execution of a definitive agreement to combine their complementary health
care products businesses in a transaction that will unite the world's largest
generic drug company and the world's largest diagnostic imaging contrast media
company. The $6.5 billion transaction will create a new multi-national leader in
the research, development, manufacturing and marketing of high-quality and
affordable health care products.
The new company, named IVAX NYCOMED CORPORATION, will direct, on a coordinated,
global scale, a generic drug program that, in terms of revenues, is nearly twice
the size of its nearest competitor, as well as a powerful hospital products
program led by a diagnostic imaging contrast media business that holds a leading
position in this $3.3 billion industry. In 1995 the two companies expect
combined revenues in excess of $2.5 billion. Together, IVAX and Hafslund Nycomed
will be strategically positioned to meet the needs of patients, payors and
society in the increasingly competitive global health care products market.
THE UNION OF WORLD LEADERS IN GENERIC DRUGS AND IMAGING AGENTS
IVAX Corporation, headquartered in Miami, Florida, is the world's largest
generic drug company and a leader in the intravenous solutions industry.
Hafslund Nycomed Corporation, headquartered in Oslo, Norway, is the world's
largest diagnostic imaging contrast media company and also has a strong presence
in generic and proprietary pharmaceuticals in key European markets. The two
companies will combine their respective skills, global distribution channels and
resources in order to succeed on an even grander scale in the research,
development, manufacture and sale of a broad range of generic and innovative
pharmaceuticals, contrast media for X-ray, magnetic resonance imaging ("MRI"),
nuclear medicine and ultrasound applications, large volume intravenous solutions
and related products, and specialized, proprietary drug delivery technologies.
The combined company will possess the advanced science and technology, critical
mass and efficiencies of scale necessary to maintain and extend its sizable lead
in these industries.
Phillip Frost, M.D., IVAX' Chairman and CEO, said of the merger, "IVAX and
Hafslund Nycomed - both pioneers and world leaders in their respective
industries - will be combined into one unified, powerful company with the
financial strength, product base, global reach, and the scientific and technical
expertise necessary to excel in the rapidly changing and ever competitive health
care industry. Together, we will be committed to one goal: providing superior
health care products that meet the needs of patients, payors and society
worldwide, by maintaining leadership positions in diagnostic imaging products
and generic pharmaceuticals and developing and marketing hospital and innovative
pharmaceutical products in targeted therapeutic areas. We will meet these needs
in two ways: by providing high quality, affordable generic pharmaceuticals which
provide patients and payors with a lower cost alternative to existing therapies,
and by providing innovative products that either fill important therapeutic or
diagnostic voids, or that represent significant advances over existing
products."
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Svein Aaser, Hafslund Nycomed's President and CEO, offered his view of the
combination: "The merger presents tremendous opportunities to enhance revenues
through the registration and sale of IVAX' generic drugs in markets where
Hafslund Nycomed is strong. The alliance of Hafslund Nycomed's world-leading
contrast media business with IVAX' intravenous solutions business, which will
permit both businesses to reap the benefits of our excellent global hospital
relationships and complementary product lines, will enhance revenues as well. In
addition, we will marry our leading research and development programs to produce
the largest and most prolific generic drug and contrast imaging development
programs in the world. Although we will enjoy cost savings in the process, we
are not so much trimming fat as we are adding lean muscle, and we will emerge as
a dynamic new health care products company that is far stronger than its
constituent parts -- and far stronger than its competitors."
Both CEOs agree that the combination of IVAX and Hafslund Nycomed is a wonderful
strategic fit, largely due to the reciprocal growth strategies employed by the
companies over the last few years. Both companies have emphasized the global
expansion of their businesses, recognizing that the patient populations of our
respective homelands make up just a small fraction of the world's patient
population. To this end, the combination springboards both companies into the
established international markets of the other. To another, equally critical
strategic end, both companies have also undertaken prudent strategies to
diversify their sources of revenue. IVAX did so through the 1994 acquisition of
McGaw, its intravenous products subsidiary, whose business is very compatible
with Hafslund Nycomed's contrast media business. Hafslund Nycomed did so by
building its pharmaceuticals subsidiary, Nycomed Pharma, whose business
complements IVAX' generic business. Each company's emerging business augments
the other's established, world-leading business, so that the combined company's
revenue stream is derived from diverse sources, featuring both stability and
high growth potential.
THE BUSINESS OF THE COMBINED COMPANIES
The scale of IVAX NYCOMED's operations will be substantial, with over 13,000
employees worldwide, over 1,300 of which will be coordinated in one of the
largest, most comprehensive R&D programs in the generic drug and contrast media
industries.
GENERIC PHARMACEUTICAL BUSINESS. Generic pharmaceutical products are
therapeutically identical to their brand name counterparts, but are generally
sold at lower, more affordable prices. To maximize generic sales and margins,
IVAX NYCOMED's generic drug program will focus on the development of difficult
to replicate drugs and drugs for which large patient populations exists. Its
generic mission will be to offer not only the broadest line of generic drugs
available, but to offer an array of products featuring specialty or niche
technologies not generally offered by other broad line suppliers. These
technologies include sustained release products, soft gelatin capsules, sterile
liquid products in blow-fill-seal containers, creams and ointments, and a
variety of metered dose inhalers for respiratory diseases.
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Generic drug sales of this new giant will be by far the largest in the world --
nearly twice the size of its nearest competitor. The combined company will have
1995 generic drug revenues exceeding $1 billion. It will have an extensive
manufactured generic drug portfolio featuring several hundred products in a
broad range of therapeutic categories; a team of over 100 scientists and staff
working exclusively on the development of new generic applications for
submission to regulatory bodies around the world; more than 70 active generic
projects; and annual generic R&D expenditures exceeding the industry average.
Management believes that a generic drug R&D program on such a scale will result
in an improved success rate in the generic drug approval process. In the
increasingly competitive generic industry, new generic drug approvals are
generally considered critical for success, and IVAX' generic drug pipeline has
been among the industry's most prolific. In 1995, IVAX has received, to date,
more U.S. generic drug approvals than any other company.
IMAGING CONTRAST MEDIA BUSINESS. Hafslund Nycomed is the global leader in the
development of safe and effective contrast agents for all major diagnostic
imaging technologies: X-ray, MRI and ultrasound. Contrast agents are an
essential component of imaging diagnostics. By improving the contrast of the
images obtained physicians can better detect and pinpoint abnormalities in body
organs and other soft tissues without invasive surgery.
Hafslund Nycomed pioneered the development of X-ray contrast agents, including
the non-ionic agents which are safer and better tolerated than the older ionic
agents. Hafslund Nycomed's lead X-ray product, Omnipaque(Registered trademark),
is a highly stable non-ionic contrast agent with excellent safety and tolerance
profiles for a wide range of diagnostic applications. It has annual worldwide
sales of over $1 billion, commands a 40% world market share, and is the
top-selling hospital product in the United States.
Hafslund Nycomed has also developed a new X-ray diagnostic product called
Visipaque(Registered trademark), a non-ionic dimeric contrast medium. While most
currently available non-ionic X-ray contrast media have only three X-ray
absorbing iodine atoms per particle, Visipaque contains six. In addition,
Visipaque is isotonic to human blood, has a biological profile that is well
suited for cardiovascular procedures, and is one of the safest X-ray contrast
agents available. Visipaque has already been approved for sale in nine
countries, including the United Kingdom, Germany, Spain and Norway. In the U.S.,
Visipaque has received an "approvable letter" from the FDA, and Hafslund Nycomed
expects to launch Visipaque in the U.S. by late 1995 or early 1996.
Omniscan(Registered trademark) is a non-ionic gadolinium-based contrast medium
developed by Hafslund Nycomed for MRI applications. The non-ionic nature of
Omniscan makes it a potentially safer and more effective MRI contrast medium
than available ionic agents, particularly for procedures requiring rapid
injection of large doses. Hafslund Nycomed developed Omniscan primarily as an
MRI contrast medium for the central nervous system but intends to expand its use
for general vascular applications, as well. Another MRI contrast
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medium, Abdoscan, was developed for the general detection of diseases in the
gastrointestinal region.
The contrast media development strategy of the combined company will be to
maintain its world-dominant position in X-ray contrast agents and to be on the
leading edge of advancements in contrast technologies for the growing MRI,
ultrasound and nuclear technologies. In that regard, Hafslund Nycomed has
promising programs for the development of an organ-specific contrast agent for
X-ray CAT scans of the liver, an MRI liver agent, nano-particle X-ray agents for
the lymph and gastrointestinal systems, a next generation ultrasound perfusion
contrast agent, and targeting peptide compounds for nuclear medicine.
Like its generic drug business, IVAX NYCOMED's contrast media business will be
the largest in the world. Management believes that its R&D efforts will permit
IVAX NYCOMED to maintain Hafslund Nycomed's tradition as a pioneer of advanced
contrast media technology.
INTRAVENOUS SOLUTIONS AND RELATED PRODUCTS. Through its McGaw subsidiary, IVAX
manufactures and sells a broad line of large and small volume intravenous
solutions and related products, including basic and specialty nutrition
solutions, blood plasma expanders, and a line of sophisticated intravenous
infusion pumps. IVAX is developing a proprietary admixture system called
Duplex(Trademark) which holds tremendous potential as a delivery system for a
range of injectable drugs and is believed to be superior to competing systems.
With the Duplex system, the IV solution and drug to be mixed with it are held in
separate compartments of the same IV bag until needed. The seal separating them
is then broken prior to administration, resulting in rapid and efficient mixing.
IVAX' IV solutions business is compatible with Hafslund Nycomed's contrast media
business. Both companies sell primarily to hospital markets and, in that
respect, IVAX' line, including Duplex, when marketed, will benefit substantially
from access to Hafslund Nycomed's excellent U.S. hospital relationships, as it
will from access to Hafslund Nycomed's international hospital distribution
channels. IVAX' intravenous solutions bags, made from its proprietary
Excel(Registered trademark) plastic, are expected to be adapted for use with
Hafslund Nycomed's contrast imaging media. Because Excel bags do not emit toxic
hydrogen chloride gas like competing PVC plastics when incinerated, Hafslund
Nycomed's contrast media products, in addition to being technologically
superior, will have environmental advantages.
PROPRIETARY DRUG PROGRAM. IVAX NYCOMED's proprietary pharmaceuticals program
will focus on the development of innovative drugs which fill important
therapeutic voids or which represent significant advances over existing
pharmaceutical therapies. Areas receiving particular attention are urology,
oncology, CNS, respiratory, pain and hospital products. Some of the most
promising products under development are Elmiron(Registered trademark) to treat
the debilitating bladder disease known as interstitial cystitis (marketed in
Canada; NDA filed in the U.S.); Cervene(Trademark) to control central nervous
system damage following ischemic
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stroke (Phase III trials); nalmefene to reverse the effects of narcotic
anesthesia and overdoses (licensed to Ohmeda in U.S. and Canada; NDA approved;
marketed in the U.S.; to be registered worldwide by IVAX); nalmefene for the
treatment of alcoholism (Phase II trials); paclitaxel for the treatment of
ovarian, breast and other cancers (Phase III trials); Lornoxicam, a safe,
reliable and effective non-steroidal analgesic/anti- rheumatic for the treatment
of post-operative pain; and CNS anti cancer, an agent consisting of a target
seeking carrier protein and a modified bacterial toxin against brain tumours;
and hemoregulatory peptide, a substance that stimulates the relief of growth
factors in the bone marrow and accelerates regeneration of cells in the blood
and immune systems.
IVAX NYCOMED will have a powerful respiratory drug franchise centered around its
expertise with a variety of metered dose inhaler technologies. Worldwide, IVAX
has sold tens of millions of conventional metered dose inhalers containing
albuterol, beclomethasone, and cromolyn sodium. IVAX has an application pending
in the U.S. for a conventional metered dose inhaler version of albuterol. This
particular product is already being sold in the U.K., Canada and 25 other
countries. In 1995, IVAX received approval to market a variety of asthma
medications, including albuterol and beclomethasone, in its innovative, patented
breath activated inhaler called Easi-Breathe(Trademark) in the United Kingdom
and Ireland, and applications are pending in other countries. Unlike
conventional inhalers, which require the patient to coordinate the manual
discharge of the medication with the act of inhaling, Easi-Breathe releases the
exact dosage automatically upon the patient's inhalation, minimizing the
coordination problems experienced by over half of all patients using inhalers.
IVAX NYCOMED will also dedicate considerable resources to the completion of
IVAX' advanced, promising programs for the development of non-CFC and multi-dose
dry powder inhalers.
SUMMARY OF THE TRANSACTION
The steps involved in the combination of IVAX CORPORATION and Hafslund Nycomed,
which will occur substantially simultaneously, are as follows: IVAX NYCOMED
CORPORATION is a newly organised Florida Corporation. IVAX will become a
wholly-owned subsidiary of IVAX NYCOMED and IVAX shareholders will receive
common shares of IVAX NYCOMED on a one-for-one basis. Hafslund Nycomed's medical
businesses will be transferred to a wholly-owned subsidiary of Hafslund Nycomed
called "NYCOMED AS," and Hafslund Nycomed shareholders will receive shares in
IVAX NYCOMED on a one-for-one basis through share ownership of a Norwegian
holding company called IVAX NYCOMED B. Hafslund Nycomed will retain its energy
business and change its name to "Hafslund AS." After completion of the merger:
IVAX NYCOMED will own 100% of the shares of each of IVAX and NYCOMED AS (the
company holding Hafslund Nycomed's medical businesses); Hafslund Nycomed's
shareholders will own 100% of the shares of IVAX NYCOMED B (which will, in turn,
hold shares of IVAX NYCOMED for the benefit of IVAX NYCOMED B's shareholders);
Hafslund Nycomed's shareholders will in addition own 100% of the shares of
Hafslund AS; and IVAX' shareholders will own shares in IVAX NYCOMED.
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After the merger IVAX NYCOMED CORPORATION would, assuming the merger was
completed today, have approximately 218 million shares outstanding. Hafslund
Nycomed's shareholders will through NYCOMED B own one common share of IVAX
NYCOMED CORPORATION for each share of Hafslund Nycomed, which in the aggregate
will be approximately 46% of the common shares of IVAX NYCOMED CORPORATION, and
will in addition own all of the shares of Hafslund AS (the company holding
Hafslund Nycomed's Norwegian energy business). IVAX' shareholders will own one
common share of IVAX NYCOMED CORPORATION for each common share of IVAX, which in
the aggregate will be approximately 54% of the common shares of IVAX NYCOMED
CORPORATION.
Shares of IVAX NYCOMED are expected to be traded on the American and London
Stock Exchanges. Shares of IVAX NYCOMED B are expected to be traded on the Oslo
and Copenhagen Stock Exchanges. Hafslund AS shares are expected to be listed on
the Oslo Stock Exchange.
The transaction will be accounted for as a pooling-of-interests under both U.S.
and Norwegian accounting standards.
The merger between IVAX NYCOMED CORPORATION and IVAX will be a tax-free
transaction under US tax rules to all IVAX U.S. shareholders. Hafslund Nycomed's
exchange of shares of NYCOMED AS for common shares of IVAX NYCOMED CORPORATION
will, subject to grant of tax relief from the Norwegian government, be tax-free.
The Norwegian Ministry of Finance has advised Hafslund Nycomed that it will
support the grant of such tax relief. The demerger of Hafslund Nycomed will be
tax-free. The demerger of Hafslund Nycomed will have tax consequences for
certain of Hafslund Nycomed's non-Norwegian shareholders. For Hafslund Nycomed's
US shareholders at the time of the closing, the demerger is expected to be
treated as the distribution of a dividend. For Hafslund Nycomed's UK
shareholders at the time of the closing, the demerger is expected to lead to
capital gains taxation. For Hafslund Nycomed's Danish shareholders at the time
of the closing, the demerger would under generally applicable Danish tax rules
be treated as the distribution of a dividend, but Hafslund Nycomed will file an
application seeking capital gains treatment instead of dividend treatment. The
Danish tax authorities' response to such application is expected to be available
in late November.
The transaction has been approved by the Board of Directors of both companies
and is contingent upon approval by both companies' shareholders and by various
regulatory and governmental agencies in the U.S. and Norway. Shareholders of
IVAX (including Dr. Frost) holding an aggregate of 19% of IVAX' outstanding
shares have agreed to vote their shares in favor of the merger. The members of
the Board of Hafslund Nycomed, holding an aggregate of 10% of Hafslund Nycomed's
outstanding shares, have also agreed to vote their shares in favor of the
merger. Merrill Lynch, financial advisor to Hafslund Nycomed, assisted in all
aspects of the negotiations, and rendered a fairness
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opinion to the Board of Directors of Hafslund Nycomed. The Board of Directors of
IVAX received an opinion from Dillon Read as to the fairness of the merger.
The merger is contingent upon approval by both companies' shareholders and
various regulatory and governmental agencies in the U.S. and Norway. Closing is
expected to take place during the first half of 1996.
COMBINED LEADERSHIP
Consistent with the merger of equals transaction structure, the IVAX NYCOMED
Board of Directors will be comprised of an equal number of directors designated
by each company. Senior management of IVAX and Hafslund Nycomed will be combined
to form the global management team. Phillip Frost, M.D., IVAX' founder,
Chairman, Chief Executive Officer and largest individual shareholder, will serve
as Chairman of the Board of IVAX NYCOMED. Svein Aaser, presently Hafslund
Nycomed's President and Chief Executive Officer, will serve as IVAX NYCOMED's
President and Chief Executive Officer. Both Dr. Frost and Mr. Aaser will be
active in the management and affairs of IVAX NYCOMED. Terje Mikalsen, Hafslund
Nycomed's Chairman, will be Vice Chairman of IVAX NYCOMED and Chairman of the
Executive Committee. Isaac Kaye, Deputy Chief Executive Officer of IVAX and head
of IVAX' United Kingdom operations, will be Deputy Chairman of IVAX NYCOMED. It
is expected that Dr. Frost will be the largest individual shareholder of the new
company.
Reflecting the multi-national scope of its business, IVAX NYCOMED will maintain
its coordinating international headquarters in London and its United States
headquarters in Miami, with a main office in Oslo. The combined company will
have over 13,000 employees worldwide and have operations in more than 40
countries including the U.S., the Nordic Region, Benelux, UK and Ireland,
Germany, France, Russia, Eastern Europe and China.
The transaction places a value on IVAX NYCOMED in excess of $6.5 billion based
on the closing price of IVAX shares on October 15, 1995. Subject to final board
approval, dividends are expected to be paid on an annual basis, and are expected
to be $.16 per IVAX NYCOMED common share during 1996. The shareholders of IVAX
NYCOMED B shares will receive their dividends in Norwegian Kroners.
SYNERGIES AND OTHER BENEFITS OF THE MERGER
COMPLEMENTARY WORLDWIDE DISTRIBUTION OPERATIONS. The combined company is
expected to significantly benefit from operating synergies by coordinating
global marketing and distribution networks. The combination will afford IVAX the
opportunity to maximize sales of existing and new products in the markets where
Hafslund Nycomed is strong. Similarly, Hafslund Nycomed can maximize sales of
its products in markets where IVAX has a leading presence, particularly the U.S.
and the U.K., where IVAX is, in terms of units sold, the largest pharmaceutical
company.
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BROAD PRODUCT PORTFOLIO. IVAX NYCOMED will offer a broad generic drug portfolio
featuring several hundred manufactured products in a broad range of therapeutic
categories, in addition to a range of branded drugs. Management expects that the
wider portfolio of products offered by the combined company will permit IVAX
NYCOMED to better meet the needs of the increasing number of institutions and
other large volume purchasers which prefer buying from fewer sources, permitting
them to "one stop shop."
COMPLEMENTARY HOSPITAL PRODUCTS BUSINESSES. The combination will result in a
larger, stronger hospital products business with global distribution channels.
Hafslund Nycomed's imaging and IVAX' McGaw subsidiary principally market their
hospital products to institutions which tend to be very sophisticated and
cost-conscious. The combined company will benefit from the strong and, in some
cases, exclusive hospital relationships enjoyed by Hafslund Nycomed and McGaw,
particularly Hafslund Nycomed's hospital ties resulting from its world
leadership position in the medical imaging business. In addition, Hafslund
Nycomed's existing marketing infrastructure in Europe should enable McGaw to
more effectively expand the geographic scope of its business and launch its new
Duplex-based products internationally.
MANUFACTURING EFFICIENCIES. International expansion of markets will require
increased production, which will permit IVAX NYCOMED to benefit from
manufacturing efficiencies, including greater utilization of existing
facilities, cost savings derived from coordinated sourcing of raw materials and
packaging components, and the elimination of redundancies.
R&D EFFICIENCIES. IVAX NYCOMED's R&D program will be coordinated globally and
consolidated where appropriate to take advantage of complementary R&D skills and
projects. The integration and scale of the combined R&D program, and the greater
resources available to it, are expected to enhance the efficiency and
productivity of the company's new drug development program. The greater
financial resources of the combined companies will provide sufficient funds for
Hafslund Nycomed to maintain and advance its leadership position in the contrast
media industry, will enable IVAX NYCOMED to pursue a broader generic drug
development program, and will permit it to more effectively pursue targeted
development programs for innovative drugs.
SOUND FINANCIAL POSITION. IVAX NYCOMED will begin operations with a sound
balance sheet. Because the merger will be accounted for as a pooling of
interests, there will be no costs associated with the amortization of goodwill.
IVAX NYCOMED's strong cash flow and relatively low debt ratio will permit it to
pursue strategic acquisitions and invest in the development of existing and new
businesses, technologies and research programs.
IVAX' revenues and net profits for the first nine months of 1995 are expected to
be approximately $900 million and $79 million (or $.66 per share), which include
estimated revenues and net profits of $310 million and $27 million (or $.23 per
share) for the 1995 third quarter. IVAX' third quarter was adversely affected by
a decline in the gross margin
13
in its U.S. generic drug business resulting from delays associated with the
launch of certain of its recently approved, higher margin manufactured products
and competitive pressures for existing products. IVAX and Hafslund Nycomed are
each expected to announce their actual financial results for the third quarter
and first nine months of 1995 in early November 1995.
FAVORABLE IMPACT OF MERGER ON RESULTS AND CASH FLOW. Due to the nature of
Hafslund Nycomed's business, including its leadership position in the contrast
imaging products market, management expects that the combination of IVAX with
Hafslund Nycomed will, in general, result in a corporation with significantly
greater cash flow from operations and more predictable and more stable earnings.
It will also provide revenues from two diverse sources of revenue, mitigating
the impact of fluctuations in either the generic or contrast media industries.
OTHER SYNERGIES. Synergies will principally arise from additional sales due to
the improved marketing and distribution channels of the combined company. The
global expansion of both companies' businesses should generate higher income,
and the coordination of R&D, marketing, manufacturing and administration should
reduce operating expenses. Together, the synergies associated with the
transaction may account for an incremental yearly pre-tax contribution of up to
$100 million by the third year of operation.
ANTICIPATED REVENUE DRIVERS
Following the merger, IVAX NYCOMED is expected to experience short term revenue
growth related to the introduction of each company's existing products into the
markets of the other, as well as from the launch of new generic drugs as they
are approved. In the intermediate-term, revenues are expected to show further
improvement as IVAX NYCOMED's specialized drug delivery technologies, such as
its Duplex(Registered trademark) admixture system and its conventional, breath
activated and dry powder inhalers reach global markets. In the long term,
revenue growth is expected to further improve as various important proprietary
pharmaceuticals, such as Elmiron, Cervene and paclitaxel, and new contrast
media, are approved and marketed around the world.
--------------------
IVAX Corporation, headquartered in Miami, Florida, is a holding company with
subsidiaries engaged in the research, development, manufacturing and marketing
of generic and branded pharmaceuticals, intravenous solutions and related
products, IN VITRO diagnostics, personal care products and specialty chemicals.
Hafslund Nycomed Corporation, headquartered in Oslo, Norway, is a pioneer in the
development of some of the safest, most effective and most broadly distributed
imaging contrast agents available. It also manufactures a range of branded and
generic prescription and OTC drugs and consumer health care products. It also
has a division, not part of the proposed merger, engaged in the production of
hydroelectric power.
14
APPENDIX 2
DESCRIPTION OF IVAX' BUSINESS
IVAX Corporation (AMEX:IVX), headquartered in Miami, Florida, is a diversified,
multi-national health care company with subsidiaries engaged in the research,
development, manufacture and sale of branded and generic pharmaceuticals,
intravenous solutions and related products, IN VITRO diagnostics, personal care
products and specialty chemicals. Founded in 1987, IVAX has grown to become the
largest generic pharmaceutical company in the world with one of the most
extensive generic drug development programs in the industry. IVAX had 1994
revenues of $1.13 billion and has over 8,000 employees working in facilities
around the world.
IVAX' goal is to develop, manufacture and market high-quality health care
products to patients, providers and payors of health care around the world. To
that end, IVAX has built a generic drug development program focusing on those
products which are either difficult to replicate or which are used to treat
large patient populations. Thus far in 1995, IVAX' generic drug program has been
as prolific as any in the industry. In addition to generics, IVAX is dedicated
to the development of proprietary drugs, and at present has a variety of
promising projects in important therapeutic categories, including cancer,
interstitial cystitis, and central nervous system damage caused by stroke. IVAX
also has expertise with a variety of specialized drug delivery systems,
including extended release drug formulations, soft gelatin capsules,
blow-fill-seal packaged products, and conventional, breath-activated, and
multi-dose dry powder inhalers. IVAX' Norton Healthcare subsidiary is the
largest pharmaceutical company in the U.K. in terms of units sold. IVAX' McGaw
subsidiary is a United States leader in intravenous solutions and related
products, and has promising new products in development, including the
innovative Duplex(Trademark) admixture system. International expansion is an
important part of IVAX' overall growth strategy and, in addition to leadership
positions in North America, the U.K. and Ireland, IVAX has extended its
operations into the Czech and Slovak Republics, Russia, Poland, Italy, Hong
Kong, Germany, China, Puerto Rico and the U.S. Virgin Islands. FORTUNE has named
IVAX on its list of the 100 Fastest Growing Companies four times, most recently
in 1995. FORBES, in its 1995 Annual Report on American Industry, ranked IVAX
first of all companies in terms of five-year annual earnings per share growth.
APPENDIX 3
DESCRIPTION OF HAFSLUND NYCOMED'S BUSINESS
Hafslund Nycomed (NYSE:HN) is a multi-national pharmaceutical company,
specializing in diagnostic imaging contrast media and multi-source
pharmaceuticals. From its headquarters in Oslo, Norway, the company employs
5,800 people at operating locations in 39 countries. In 1994, Hafslund Nycomed
had revenues of $1,245 million and net income of $143 million. Six month 1995
revenues and net income were $782 million and $119 million, respectively. (These
figures include the contribution of Hafslund Nycomed's energy business, which
accounted for approximately ten percent of revenues and income. The energy
business is not included in the intended merger). Annual R&D expenditures were
approximately 13% of pharmaceutical revenues.
The subsidiary Nycomed Imaging is the global leader in the development of safe
and effective contrast agents for all four major diagnostic imaging modalities:
X-ray, ultrasound, magnetic resonance imaging (MRI) and nuclear medicine.
Contrast agents are an essential component of imaging diagnostics, allowing
physicians to detect diseases or abnormalities in body organs and other soft
tissue without invasive surgery. Nycomed Imaging pioneered in the development of
NON-IONIC contrast agents, which have fewer and less serious side effects than
the older, ionic agents. Its lead X-ray product, Omnipaque, has worldwide sales
of over $1 billion a year and is the top-selling hospital product in the United
States. Nycomed Imaging has manufacturing facilities in Norway, France, Ireland,
the USA, Puerto Rico and China. The main products are Omnipaque, Imagopaque and
Visipaque (X-ray); and Omniscan (MRI). The products are marketed in about 110
countries worldwide, with approximately 80 percent of all contrast agent sales
being handled by the company's own marketing network. Research and development
activities are carried out in Norway, the USA, Sweden and France. Products in
development include an organ-specific contrast agent for X-ray CAT scans of the
liver, an MRI liver agent, nano-particulate X-ray agents for the lymph and
gastrointestinal systems a [third-generation] ultrasound perfusion contrast
agent, and targeting peptide compounds for nuclear medicine.
Nycomed Pharma is involved in four main therapeutic areas: prescription drugs,
generic drugs/consumer health, diagnostics and medical equipment. It is among
the four largest pharmaceutical companies in the Nordic countries, it has a
sizable presence in Belgium/Netherlands and Austria/Germany, and its marketing
network covers most of Europe, including the former USSR, Eastern Europe, and
China. The company also has considerable export activities, Japan being its
largest market. Nycomed Pharma has manufacturing facilities in Norway, Denmark,
Austria, Belgium and Estonia, and R&D activities in Norway, Austria, Denmark,
Belgium and Germany.
APPENDIX 4
FACTS ABOUT THE COMBINED COMPANY
NAME: IVAX NYCOMED CORPORATION
PRINCIPAL ADDRESSES:
LONDON OFFICE: To Be Determined
MIAMI OFFICE: 8800 N.W. 36th Street
Miami, FL 33178
OSLO OFFICE: Slemdalsveien 37
N-0301 Oslo, Norway
STATE OF INCORPORATION: Florida
EXCHANGES: American and London
SHARES OUTSTANDING: 218 million
EMPLOYEES: Over 13,000 in more than 40
countries
1994 PRO FORMA FINANCIAL HIGHLIGHTS:
REVENUES: $2,380 million
NET INCOME: $ 234 million
1994 PRO FORMA REVENUE STREAM BY PRODUCT LINE:
PHARMACEUTICALS: $1,176 million
IMAGING CONTRAST MEDIA: $ 505 million
INTRAVENOUS: $ 338 million
OTHER: $ 199 million
APPENDIX 5
BIOGRAPHIES OF CHIEF EXECUTIVE OFFICERS
PHILLIP FROST, M.D.
Dr. Frost, age 58, has served as Chairman of the Board of Directors and Chief
Executive Officer of IVAX Corporation since 1987. He founded IVAX in 1987, and
is presently its largest shareholder, holding approximately 12.2% of IVAX
outstanding stock. Dr. Frost was Chairman of the Board of Directors of Key
Pharmaceuticals, Inc. from 1972 to 1986. He was the Chairman of the Department
of Dermatology at Mt. Sinai Medical Center of Greater Miami, Miami Beach,
Florida from 1972 to 1990. He is Vice Chairman of the Board of Directors of
North American Vaccine, Inc., and a director of American Exploration Company
(oil and gas exploration and production), Intercontinental Bank, Napro
BioTherapeutics, Inc. (biopharmaceutical research and development), and Whitman
Medical Corp. (proprietary education), as well as a trustee of the University of
Miami and a member of the Board of Governors of the American Stock Exchange.
SVEIN AASER
Mr. Aaser, age 49, has served as President and Chief Executive of Hafslund
Nycomed since 1987. He graduated from the Norwegian School of Economics and
Business Administration. He was Managing Director of Storebrand Skade A/S before
joining the Company in 1987. He is also a member of the Norwegian Export
Council, the Norwegian Swedish Chamber of Commerce and Det norske Veritas, and
member of the Corporate Assembly of Den norske Bank, UNI Storebrand and Norsk
Hydro. He has served as Managing Director of Nora Food Products and as President
of the Confederation of Norwegian Business and Industry.