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Merck’s Offer for Bany Faces Opposition

February 27, 2003

TOKYO (AP) _ The $1.5 billion offer from U.S. drug giant Merck & Co. to take over a major Japanese pharmaceutical company may be headed for trouble.

Tokyo-based Banyu Pharmaceutical Co. has received a letter from a shareholder, London-based Elliott Advisors, about the deal, company spokeswoman Kazuko Kamiya said Thursday.

New Jersey-based Merck is seeking to buy the 49 percent of Banyu it does not own and make the company its largest wholly owned subsidiary outside the United States. Merck’s offer expires March 6, Kamiya said, refusing to reveal details of the letter Banyu received Wednesday.

A Wall Street Journal report Wednesday quoted a fund manager at Elliott Advisors as saying opposition to the deal represents 20 percent of the shareholders, enough to block the deal.

The newspaper said fund managers consider Merck’s offer as too low because Banyu’s shares were driven to a seven-year low before the deal’s announcement, largely because of a dispute over royalties with Merck.

And Banyu has been criticized for not having hired a financial adviser to evaluate Merck’s offer before its board voted to support the deal, the newspaper said.

Tetsurou Kobayashi, a Banyu spokesman, told the Journal the company sought legal advice and consulted a ``financial expert.″ He declined to name the expert.

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