French Pharmaceutical Company to Acquire Rorer
PARIS (AP) _ The French chemical giant Rhone-Poulenc SA said Monday it signed a definitive agreement to merge its pharmaceutical business with Rorer Group Inc. in a deal valued at nearly $1.7 billion.
The merger is the latest in the drug industry aimed at lowering research costs and gaining global markets.
Last year, Philadelphia-based SmithKline Beckman Corp. merged with Britain’s Beecham Group PLC to form SmithKline Beecham, and New York-based Brisol Myers Co. acquired Squibb Corp., of Princeton, N.J., to form Bristol- Myers Squibb Co.
French state-owned Rhone-Poulenc said the latest transaction will encompass several stages, with Rhone-Poulenc initially offering $78 per share for 50.1 percent of Rorer’s 21.6 million shares.
Following the tender offer Rhone-Poulenc will transfer its pharmaceuticals business and issue contingent value rights to Rorer, with the number corresponding to non-tendered Rorer shares.
In exchange, Rorer will take on $265 million of Rhone-Poulenc debt and acquire the French group’s existing U.S. pharmaceutical subsidiary for $20 million.
Rorer also will create 24 million new shares, giving Rhone-Poulenc 68 percent of Rorer’s share capital comprising some 67.3 million shares.
Rhone-Poulenc expects to acquire the 68 percent of Rorer by June 1990.
The tender offer represents a bid of $1.685 billion and will go into effect Friday, Rhone-Poulenc said. The companies had announced their intentions to merge earlier this year.
Rorer, based in the Philadelphia suburb of Fort Washington, is best known for its Maalox antacid. Rhone-Poulenc is in the top 10 in the European pharmaceutical market but has no direct marketing in the United States or Japan.
The merged group, to be called Rhone-Poulenc Rorer, will be headquartered at Fort Washington and will have annual sales exceeding $3 billion.
″Through Rhone-Poulenc Rorer, we will achieve our mission of becoming a top 10 research-based pharmaceutical company,″ said Robert E. Cawthorn, chairman, president, and chief executive officer of Rorer. Cawthorn has as been named to the same positions of the new company.
Igor Landau, president of Rhone-Poulenc’s health sector, said in a written statement, ″Rhone-Poulenc has confidence in the potenial of this new company...we will fulfill our global and American ambitions in the pharmaceutical business.″
The human pharmaceutical business of Rhone-Poulenc had sales of $1.9 billion in 1989, while Rorer had $1.2 billion, the companies said.
The offer hinges on several conditions, among them that Rhone-Poulenc and Rorer obtain a $1.6 billion loan to help finance the merger, and at least 32.4 million Rorer shares be tendered.
Financial analysts said the terms of the operation are in line with market expectations.
On Wall Street, Rorer’s stock surged $4.12 1/2 by 11 a.m. EST to $67 a share in heavy trading.