Cardinal Health Probing Syncor
Nov. 06, 2002
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DUBLIN, Ohio (AP) _ Drug wholesaler Cardinal Health Inc. said Wednesday that a California-based nuclear pharmacy services company it plans to acquire may have made improper payments to customers overseas.
Cardinal Health, based in this Columbus suburb, discovered the payments while reviewing operations at Syncor International Corp., before proceeding with a $1.1 billion takeover proposal that Cardinal announced June 14.
Syncor released a statement Wednesday saying its chairman and the head of its Asian operations have been placed on paid leave while it investigates whether subsidiaries made improper payments to customers overseas.
Syncor, based in Woodland Hills, Calif., outside Los Angeles, said it has disclosed the payments to the Department of Justice and the Securities and Exchange Commission.
Trading in Syncor stock on the Nasdaq Stock Market was halted for most of the day but when it resumed trading in the late afternoon, it tumbled 25 percent, or $9.02 a share, to $26.90.
A message seeking comment was left with Syncor spokesman Allan Mayer.
Cardinal said Syncor would have to satisfy requirements of the merger agreement before the deal could go through.
Syncor shareholders were scheduled to vote on the acquisition on Nov. 19. That meeting has been pushed back to Dec. 6, Cardinal spokesman David Verbraska said.
``We take this as a very serious matter, one that we uncovered,'' he said. ``These are improper payments. Our shareholders expect us to uphold the highest ethical standards.''
Syncor chairman Monty Fu and his brother, Moses Fu, director of Syncor Overseas Ltd., are on paid leave pending completion of an investigation into their involvement of the payments, the company said.
Verbraska said the investigation does not affect Cardinal's bottom line.
``It's a pending acquisition'' he said. ``We don't feel it'll have any adverse affect on our shareholders at all.''
Nuclear pharmacy services, also called radiopharmacy, involve the use of radioactive compounds that are ingested or injected in organs or tissues. They can be used for diagnostic and therapeutic use and can allow doctors to treat illnesses without the risk or expense of surgery.
The services can be used to detect such problems as heart disease and cancer.
Syncor has 2,500 employees and earned $37 million in 2001 on sales of $774 million.
In late trading, Cardinal shares were up 44 cents at $69.73 on the New York Stock Exchange.
On the Net:
Cardinal Health: http://www.cardinal.com