Is anyone following Biovail?
Last week Hoescht (H) settled its lawsuit with Andrx, opening the way for
Biovail's Cardizem CD.
The Wall Street Journal's headline was "Hoechst, Seeking Approval of
Merger, Opens Way for Cardiem's Generic Rival (June10,99 WSJ). The
merger referred to is with Rhone-Poulinec SA. The reasoning being that this
$22B merger might not have proceeded with a suit hanging over the head of
H.
The same article goes on the state that "Hoechst's decision to end the
controversial payments to (Andrx) is likely to improve its chances with the
FTC, which is also invesitgating possible violations of a consent decree arising
from Hoescht's 1995 purchase of Marion Merrel Down Inc. (MMD).
As I commented earlier, Bivail is suing Hoechst for $1.2B for anti-trust
activities and specifically for breaching an agreement Bivail had with H, as as
result of H merging with MMD in 1995, as noted above. Will H want to settle
with Biovail now in order to be able to proceed with its current merger plans?
Is the settlement with Andrx a precedent? Its a speculation but? And this is
where the plot gets a bit thicker.
In a 64 page ruling on June 1, 1999, a New Jersey District Court Judge,in the
$1.2B action favours Biovail on virtually all of Biovail's claims.. Just a few of
the summary quotes:
"..this court finds that Biovail has adequetly pleaded violations of Section 1 and
2 of the Sherman Act".
"Biovail has adequately pleaded that it suffered injury from defendants' antitrust
violations"
"this court will, therefore, proceed directly to Biovail's claim that the contract
defendants breached the Settlement Agreement" (The Settlement Agreement
which flowed from H's 1995 merger with MMD, which amogst other things
gave Biovail the Tiazac NDA and in which H agreed not to interfere with
Biovail's processing any diltiazem product etc.).
"the defendant's motion to dismiss Biovail's state law claims is denied" meaning
that Biovail may claim damages for unfair competition under state common
law.
"...Biovail has adequetly pleaded the the Individual Defendants knowingly
participated in the wrongdoing alleged" (collusion amongst the defendants).
While these are grounds for proceeding to trial and not conclusive evidence of
guilt, but a trial can easily take a year or so, so is the quick settlement with
Andrx to permit H's current merger plans to proceed by this Novemver, a
precedent for Biovail? Even 10% of $1.2B is $120 million?
You be the judge! I have made my decisions.
Happy investing,
andras |
