UK life sciences company BTG is to buy Protherics in an all-stock deal worth £218.1 million, representing the latest development in the fervent merger-and-acquisition activity affecting the sector in the country.

Under the terms of the deal, Protherics stockholders will get 0.291 new BTG shares for every one they hold, which values the former at £0.60 per share. This represents a premium of 45.5% to Protherics’ closing price yesterday.

The two firms said that merger cost synergies and rationalisation of the enlarged group's cost base will approach £20 million per year by 2010/11, and the acquisition is forecast to be earnings enhancing and cash neutral from 2009/10. It should be “significantly earnings enhancing thereafter”, they claimed.

It is no surprise that Protherics has been acquired as the company announced last month that it had received approaches “from a number of parties” interested in buying the firm. What is most surprising is that the buyer is not a big pharma group and AstraZeneca, which holds a 3.2% stake in Protherics, had been regarded in some circles as the most likely buyer.

Still, John Brown, chairman of BTG, is delighted and said that the merger “will create one of the UK’s leading biopharmaceutical companies”. He added that “we will have a valuable portfolio of licensed and marketed products, a pipeline of mid-to-late stage programmes in clinical development, and the cash resources and development expertise to progress the combined pipeline”.

Dr Brown added that the new entity will look to bring in additional products that can be taken to market through the creation of a specialty sales force in the USA. He went on to say that BTG “has demonstrated the ability to operate profitably, and by combining with Protherics has the opportunity to create a sustainably profitable business".

Stuart Wallis, chairman of Protherics, added that the enlarged group “will have the critical mass in terms of financial resources, skills and development pipeline to leverage the full potential of our critical care products that we have the opportunity to sell in the USA from 2010 onwards”.

Protherics currently gets its revenues from its toxicity drug DigiFab (digoxin immune fab), the rattlesnake antivenom CroFab (crotalidae polyvalent immune fab), sold by Nycomed in the USA and Voraxaze (carboxypeptidase G2), an adjunctive therapy for patients with impaired kidney function. BTG gets royalties from the anticoagulant treatment BeneFIX (recombinant coagulation factor IX) marketed by Wyeth, and the oncology drug Campath (alemtuzumab), marketed by Bayer.