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Serono plans major acquisitions

Europe's largest biotechnology firm Serono plans to raise capital for acquisitions.

April 6, 2006

Europe's largest biotechnology firm Serono has announced a plan to raise capital for potential acquisitions. The Swiss firm said it would ask shareholders 
to allow the board to create new shares valued at SwFr7.3bn ($5.6bn).

Novartis, GlaxoSmithKline and most recently Astellas have all been linked with a move for Serono but the absence of any firm offers has caused concern 
in the market about the firm's future direction. Chief executive Ernesto Bertarelli hired Goldman Sachs as adviser in November after Serono halted 
research on three experimental drugs.

The stock would give Serono "the necessary flexibility to seize any financing opportunities, acquisitions and other strategic investments as they may 
arise,'' the firm said in a statement.

However, analysts reacted differently to Serono's move.

The latest move indicates the biotech firm is more likely to remain on a stand-alone basis and pursue takeovers, said an analyst. Serono should look for 
acquisitions that would improve its oncology business and renew efforts to reduce its dependence on Rebif, a multiple sclerosis drug that currently 
accounts for around half of its annual sales of about $2.5 billion, he said.

If shareholders approve the share plan, Serono would have up to two years to use the capital to chase a large takeover or a string of smaller purchases 
that would involve a share swap. Serono will seek shareholder approval at its annual general meeting on April 25.

Reports in the Swiss media have suggested that Bertarelli could soon be stepping down. The 40-year old billionaire is understood to be organising a 
defence of his 2003 victory in the America's Cup yacht race and the market would welcome an experienced biotech executive at the helm of the Swiss 
biotechnology firm.

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