CSL Creates ZLB Behring, a World-Leading Plasma Therapeutics Group Through the Combination of ZLB and Aventis Behring.

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Business Editors/Health/Medical Writers

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MELBOURNE, Australia--(BUSINESS WIRE)--Dec. 9, 2003

CSL Limited today announced it had signed an agreement to acquire the global plasma therapeutics business of Aventis Behring from Aventis.

CSL's Managing Director, Dr. Brian McNamee, said, "The acquisition creates a world-leading plasma therapeutics business by combining ZLB's outstanding IVIG business, plasma fractionation and production with Aventis Behring's leading coagulation products, haemophilia expertise and specialty products marketing reach."

"The key attributes for success in the plasma products industry include cost effective infrastructure, high yielding manufacturing processes, a broad product range and strong marketing reach. Following the acquisition of Aventis Behring, CSL will have all of these attributes."

The purchase price comprises an up-front payment of US$550 million, deferred payments totalling US$125 million and a contingent payment. The acquisition is expected to enhance CSL's earnings per share in 2004/2005.

Closing of the acquisition is subject to approvals from regulatory authorities, with completion expected in the first half of 2004.

Strategic and Financial Highlights

The acquisition leverages the strategic attributes of ZLB Bioplasma and Plasma Services. ZLB and Aventis Behring are highly complementary in terms of product portfolio, manufacturing, geography, R&D and sales & marketing. The combined plasma operations, to be named 'ZLB Behring', will deliver enhanced economic returns and superior growth potential in a competitive market. Highlights of the transaction include -

-- A more diverse and highly competitive product portfolio

-- Higher profit per litre of plasma processed and efficiency of

throughput, taking advantage of production efficiencies, yield

optimisation and increased revenue per litre

-- Complementary R&D portfolio, to be focused on life cycle

management

-- Global footprint with operations in Europe, the United States,

Japan and other markets

-- A lower cost plasma sourcing and manufacturing process through

the combination of each business' manufacturing and support

capabilities into one worldwide manufacturing platform

-- Significant improvement in CSL's currency profile as a result

of a closer currency match between the company's revenue and

cost bases

-- Acquired at discounts of approximately US$625 million to the

estimated book value of net assets acquired and US$200 million

to the estimated book value of inventory acquired(1)

Aventis Behring is the 2nd largest participant in the global plasma therapeutics industry with a market share of approximately 15 percent. In 2002, the business generated sales of approximately US$1.0 billion and EBITDA of approximately US$115 million.(2) Aventis Behring is headquartered in King of Prussia, Pennsylvania, United States.

New products developed by Aventis Behring, such as Alpha 1-proteinase inhibitor ('A1PI'), provide CSL with opportunities to accelerate growth and expand margins. A1PI is a treatment for the prevention of emphysema (hereditary deficiency) that was approved by the US Food and Drug Administration in July 2003 after a fast-track review.

Dr. McNamee said, "CSL is confident that there is significant scope to improve the profitability and cash flows of the combined business by optimising production flows and removing duplication between the businesses."

Based on 10 months of detailed due diligence, CSL estimates that profit improvement initiatives will generate synergy benefits in excess of US$100 million per annum, which CSL expects to substantially realise within 18 to 24 months following completion. CSL expects that one-off costs of implementing these initiatives will be approximately US$125 million, to be incurred over 12 to 18 months following completion of the acquisition. Cash flows are expected to benefit from a reduction in inventory levels in the normal course of trading by approximately US$180 million over the first 15 months following completion.

Industry Outlook

Dr. McNamee said, "Demand for both plasma-derived and recombinant products is expected to continue to grow at stable and attractive rates. Market forecasts are for the global plasma therapeutics industry to achieve growth of approximately 4-5 percent per annum over the next five years, although we recognise that the US market remains highly competitive.

"Global IVIG volumes are forecast to grow at 3-6 percent per annum over the next five years, reflecting an increase in the number of therapeutic applications for IVIG.

"Volumes in the global recombinant Factor VIII market are expected to grow at 6-8 percent per annum over the next five years, driven by a trend towards higher dosages, an ageing patient population and the move to prophylactic dosing", Dr. McNamee said.

"Plasma derived Factor VIII is expected to experience 2 percent volume growth over the next five years, supported by demand growth in new markets outside the US and Europe and growth in von Willebrand's applications. In the US and Europe, use of von Willebrand's factor will not be eroded by recombinant Factor VIII."

Integration and Management

ZLB Behring will be led by the current President of ZLB Bioplasma, Peter Turner.

CSL has undertaken extensive due diligence on the opportunities available in integrating ZLB and Aventis Behring. Although many decisions on the final structure remain, opportunities for overhead rationalisation and elimination of duplicate structures are clear. In addition, unique opportunities to optimise manufacturing processes without sacrificing product lines or growth potential are available.

A dedicated team, including experienced CSL managers and external integration specialists, has been established to focus on implementation of the integration plan. Once the transaction has received all relevant approvals and is completed, Aventis Behring team members are expected to form an important part of the integration effort.

Update on Trading

CSL also provided guidance today on the forecast trading result for the Group for the 2003/2004 financial year and the half year ending 31 December 2003.

Due to the potential sale of the Company's Animal Health business and the anticipated completion of the acquisition of Aventis Behring before financial year end, with both initiatives likely to be positive to reported profit, it is not possible to forecast with certainty the full year result.

CSL anticipates that the full year net profit after tax (NPAT) will be affected by a negative impact of currency movements to the extent of approximately A$10 million, assuming the six month average exchange rates continue. It is noted, however, that this impact is consistent with the table, showing the sensitivity of earnings to changes in foreign exchange rates, which CSL released in its results presentation to analysts in August this year, and which was posted on the Company's website. In addition, the delay in the launch of CSL's liquid IVIG product, as advised in this announcement, is likely to have an adverse impact on full year NPAT of approximately A$5 million.

Turning to the half year result, the Company advised at its Annual General Meeting, that NPAT for the half year would be similar to the second half of last financial year. However the currency impact noted above, coupled with the continued strength of the Australian dollar, has translated into a likely negative impact of A$5 million. Furthermore, due to a continuing highly competitive market in the US, product pricing has been unstable, particularly for Albumin, with a likely negative impact of A$3 million, the effect of which is anticipated to be offset in the full year due to the forecast better performance by the Group in the second half of the financial year.

Liquid IVIG

CSL also advised today that following acceptance by the FDA in October 2002 of the application for registration of ZLB's liquid IVIG for review as a Biological License Application supplement, the FDA has now requested additional clinical data to support registration of ZLB's liquid product.

Discussions with the FDA concerning its request for further clinical data will now begin. A written response to the FDA supporting the case for registration of the product based on currently available data will be submitted without delay, although the outcome of these submissions cannot be predicted with any certainty.

The Company confirmed that registration of ZLB's liquid IVIG in Switzerland and the U.K. is still anticipated in the first quarter of 2004 and expansion of registrations to certain other European countries is anticipated in the second half of 2004.

CSL further advised that ZLB's second generation chromatographically purified liquid IVIG program remained on track with the filing of the IND targeted for early 2004 and the clinical program meeting current USA and European guidelines commencing in mid 2004.

Strategic Review of Animal Health

CSL also provided today an update on progress relating to the strategic review of its Animal Health business, which it announced at the Company's Annual General Meeting. Negotiations on a possible sale of the business have now begun with a number of interested industry parties with a view to trying to reach a conclusion shortly. The Company advised that indicative prices for the business were so far encouraging.

About CSL

The CSL Group of companies develops, manufactures and markets pharmaceutical products of biological origin. Our business is health care:

-- Life-saving products derived from human plasma;

-- Pharmaceuticals and diagnostics essential to health;

-- Cell culture reagents for the pharmaceutical industry;

-- Veterinary vaccines and diagnostics to protect livestock and

companion animals.

CSL has substantial manufacturing facilities in Europe, the US and Australia. The Group operates globally through four businesses:

-- Human Health

-- JRH Biosciences

-- Animal Health

-- ZLB Plasma Services

CSL's Human Health business includes the operations of ZLB Bioplasma, CSL Bioplasma and CSL Pharmaceutical, as well as our global new product development activities.

(1)Aventis Behring net assets and inventory values represent estimated book values at closing, based on Aventis Behring special purpose financial statements. It is estimated that the book value of inventory at closing will be in the range of US$850 million to US$900 million.

(2)Source: Aventis Behring special purpose financial statements, adjusted for items identified as material and unusual or non-recurring. Aventis Behring's historical performance reflects historical production and inventory decisions that will differ materially from management practices under CSL ownership.

Attachment A: Description of Aventis Behring

The business to be acquired by CSL includes:

-- Manufacturing facilities located at -

-- Kankakee, Illinois, United States (capacity of 2.0m plasma

equivalent litres ("PEQ"));

-- Marburg, Germany and Vienna, Austria (combined capacity of

1.2m PEQ)

Aventis Behring's Barcelona plant is to be closed, with all

closure costs being borne by Aventis.

Between 1997 and 2002, Aventis Behring has invested

approximately US$462 million on upgrading its key

manufacturing facilities, including approximately US$105

million spent at Kankakee on the new A1PI plant.

-- All of Aventis Behring's inventory and other working capital

-- Recombinant Factor VIII assets, including the Helixate

distribution contract with Bayer

-- Share in Freudenberg patents associated with stabilisation of

recombinant Factor VIII - Aventis and ZLB Behring to jointly

prosecute this intellectual property

-- Plasma collection business, Aventis Bio-Services, comprising

58 collection centres in the United States and 10 collection

centres in Germany with an estimated collection volume of 2.5m

litres per annum

-- 28 regional sales offices

-- Research & development pipeline

-- Approximately 5,800 employees worldwide

-- Headquarters located at King of Prussia, Pennsylvania, USA

Attachment B: Aventis Behring Product and Financial Information

Key Products

      Haemophilia              IVIG                  Critical Care
-----------------------     ------------------      ----------------
 Recombinant F VIII          Non-Specific            Albumin
  Helixate(R)FS/NexGen        Beriglobin(R) P
                              Gammar(R)- P IV        Inhibitors
Plasma-derived F VIII                                Kybernin(R) P
 Beriate(R) P                                        (ATIII)
 Haemate(R) P                Specific
 Humate-P(R)                 Several

Plasma-derived F IX
 Mononine(R)

    Wound-Healing               Respiratory
                                 Diseases
-----------------------     ------------------
Beriplast(R) P                ZeMaira(TM)
                             (A1PI launched in
                              2003)

Sales Mix

Aventis Behring maintains a very broad product offering with world-leading positions in haemophilia and plasma products for critical care.

Note: See Site Pie Charts for Further Information

Historical Investment in Manufacturing Facilities from Aventis Behring (1997 - 2002)

Note: See Site Pie Charts for Further Information

Current Plasma R&D Projects

                   Research and Development Programs
----------------------------------------------------------------------
                       ZLB and CSL               Aventis Behring
              ------------------------------ -------------------------
 Immunology      Liquid Intravenous IgG         Subcutaneous IgG
                 Anti D Immunoglobulin          Hyperimmune IgGs
                  Rhophylac
                  MonoRho (Recombinant for HDN)
----------------------------------------------------------------------
 Haemophilia     Biostate (vWf)               Humate/Haemate P (vWf)
                  Clinical Phase               New formulation and
                                                VI step
                                              Mononine (haemophilia B)
                                               New reconstitution
                                                system and size
----------------------------------------------------------------------
 Haemostasis/    Haemostatic Dressing         Liquid Fibrin Sealant
Wound healing/    Clinical Phase -
Critical Care      major arterial bleeding
                  Partner: American Red
                   Cross
                 Reconstituted HDL
                  Preclinical phase - stroke
----------------------------------------------------------------------

Key Historical Financials (3)
                                                      Jan - Sep
 (US$ Million)                   CY2002                 2003
                         ---------------------------------------------
 Revenue                          1,003                  789
----------------------------------------------------------------------
 R&D Spend                           79                   49
----------------------------------------------------------------------
     % of Sales                     7.9%                 6.2%
----------------------------------------------------------------------
 EBITDA                             115                   77
----------------------------------------------------------------------
     Margin (%)                    11.5%                 9.8%
----------------------------------------------------------------------
 EBIT                                45                   25
----------------------------------------------------------------------
     Margin (%)                     4.5%                 3.2%
----------------------------------------------------------------------

(3) Source: Aventis Behring special purpose financial statements,
    adjusted for items identified as material and unusual or
    non-recurring. Aventis Behring's historical performance reflects
    historical production and inventory decisions that will differ
    materially from management practices under CSL ownership.

Risks Associated with the Acquisition

CSL is subject to a number of risks associated with the acquisition of Aventis Behring. Without limitation, those risks include:

-- The proposed acquisition may not be consummated or may be

delayed. For example, CSL must obtain approvals from

regulatory authorities before it is able to complete the

acquisition of Aventis Behring, and those approvals may not be

forthcoming or may be delayed. A delay in closing of the

acquisition later than CSL's assumption of 1 April 2004 may

have a material impact on the financial outcome of the

acquisition in any particular financial year

-- Accounting information in this announcement, including the

measurement of earnings per share, has been determined on the

assumption that CSL's accounts are prepared in accordance with

current Australian generally accepted accounting principles

(GAAP). In the event that the acquisition closes after 30 June

2004, CSL will publish its accounts for the 2004/2005

financial year under Australian GAAP. For the 2005/2006 year,

CSL will publish its accounts under International Accounting

Standards (IAS) including a restatement of its 2004/2005

results under IAS. The impact of the change from Australian

GAAP to IAS on the 2004/2005 results, if the acquisition of

Aventis Behring closes in the 2004/2005 financial year, is

that

-- Discount on acquisition will be accounted for as revenue in

the year of the acquisition

-- Restructuring costs will not be provisioned, and will be

recognised as expenses when paid

-- CSL may not realise the benefits it expects from the proposed

acquisition or may incur higher than expected operating and/or

restructuring costs

-- CSL's successful funding of the acquisition depends upon

certain conditions. Failure to meet any of those conditions

could adversely affect its financial condition

-- The proposed integration of the Aventis Behring business may

be more difficult than expected

-- Historical information regarding Aventis Behring contained

herein has been sourced from Aventis Behring and/or Aventis

and has not been independently audited by CSL. CSL makes no

representation as to its accuracy

-- The pro forma combined financial information presented herein

is preliminary in nature and may be subject to change

-- Aventis Behring's historical performance reflects historical

production and inventory decisions that will differ materially

from management practices under CSL ownership

-- On completion of the acquisition, CSL will assume certain

liabilities and obligations of Aventis Behring, including

legal and regulatory liabilities and obligations for which it

may not be indemnified

Risks Associated with the Businesses of CSL and Aventis Behring

The businesses of CSL and/or Aventis Behring are subject to a number of risks affecting ordinary operating activities, many of which are outside their control. Without limitation, those risks include:

-- Developments in the various businesses and markets in which

CSL and/or Aventis Behring operate, including changes in:

competition; pricing; product supply; manufacturing capacity;

customer demand and market acceptance for new and existing

products; research and development; regulatory approval of

newly developed products; and technological innovation

including the emergence of new competitive or substitute

products

-- Developments or changes in relevant legislation or

regulations; labour relations; the economic environment;

foreign currency exchange rates; interest rates and credit

spreads; the state of the capital markets, which may affect

CSL's ability to raise debt or equity; the availability and/or

cost of insurance; and the risk of regulatory action or

litigation

-- Heightened regulatory risk as a result of the Kankakee plant

operating under a consent decree from the FDA since January

1997. The Kankakee site has recently undergone an inspection

by the FDA, resulting in a number of observations

-- Significant volatility in product pricing and demand

-- Emergence of previously unknown viruses or other illnesses,

giving rise to legal liabilities, increased testing

requirements, product obsolescence or other adverse

consequences

-- Developments in the plasma products industry, including

changes in collection and fractionation capacity, yields among

industry participants, and competitors' actions

-- Changes in healthcare regulations/arrangements and

reimbursement policies in various economies where CSL is

sourcing, producing, distributing or selling

-- Continuity of key contracts including, for CSL, renegotiation

of the Plasma Fractionation Agreement with the Commonwealth,

and enforcement of key intellectual property

Any of these risks could have a material impact on the businesses and/or financial condition of CSL and/or Aventis Behring

Additional Business Risks

In addition to the previous points, there are three other specific business risks faced by Aventis Behring

-- Genentech has initiated litigation against Bayer which aims to

have Bayer's rights to produce recombinant factor VIII

cancelled. If successful, this may adversely impact Aventis

Behring's ability to source and sell Helixate. Helixate is a

key product for Aventis Behring and its loss would have

significant implications for Aventis Behring's business.

-- Aventis and Aventis Behring are currently involved in

litigation with both Bayer and Baxter over alleged

infringement of Aventis Behring's interest in the Freudenberg

patent covering technology involved in the production of

rFVIII. Bayer has filed a counter suit against Aventis

Behring, claiming breach of the Helixate supply agreement.

There is no guarantee that Aventis Behring will be successful

in their defence of this patent. Bayer's counter suit against

Aventis Behring represents a threat to the continued supply of

Helixate from Bayer.

-- The acquisition of Aventis Behring's business in Japan will

require a carve-out of the business from other subsidiaries in

the Aventis Group. This involves, among other things, the

transfer of manufacturing/product rights and the entering into

of agreements with third parties relating to manufacturing,

distribution and logistical services.

DISCLAIMER/IMPORTANT NOTICE

The forward looking statements included in this announcement involve subjective judgment and analysis and are subject to significant uncertainties, risks, and contingencies, many of which are outside the control of, and are unknown to, CSL. In particular, they speak only as of the date of this announcement, they assume the success of CSL's business strategies, and they are subject to significant regulatory, business, competitive and economic uncertainties and risks.

No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any person (including CSL). In particular, no representation, warranty or assurance (express or implied) is given in relation to any underlying assumption or that any forward looking statement will be achieved. Actual future events may vary materially from the forward looking statements and the assumptions on which the forward looking statements are based. Given these uncertainties, readers are cautioned to not place undue reliance on such forward looking statements.

Subject to any continuing obligations under applicable law or any relevant listing rules of the ASX, CSL disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements in this announcement to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any such statement is based.

Unless otherwise indicated, where references are made in this announcement to an Australian dollar equivalent of a US dollar amount, the Australian dollar amount has been calculated on the basis of an exchange rate of A$1.00 = US$0.70. However, exchange rates may vary, and so the applicable rate at the relevant time may be different.

Historical information regarding Aventis Behring in this announcement has been sourced from Aventis Behring and/or Aventis, and has not been independently audited or verified by CSL. Accordingly, no representation, warranty or assurance (express or implied) is given by CSL in relation to that historical information. Aventis Behring's historical performance reflects historical production and inventory decisions that will differ materially from management practices under CSL ownership. Aventis and Aventis Behring make no representation as to the accuracy of the historical financial information regarding Aventis Behring contained herein, apart from certain specific representations made in the Sale & Purchase Agreement between the parties.

This announcement is neither an offer to sell nor the solicitation of an offer to buy securities as those terms are defined in the US Securities Act of 1933, as amended (the "Securities Act"). This announcement has been prepared for publication in Australia and may not be released or distributed in the United States.

The offer of shares by CSL that is described in this announcement has not been and will not be registered under the Securities Act or the securities laws of any U.S. state, and therefore, subject to certain exceptions, may not be made directly or indirectly, within the United States or to U.S. persons. Prospective purchasers in the offering will be required to make certain representations regarding their residency and investor status before being permitted to subscribe for shares.

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