Here is the expected takeover news:
Top Financial News
Mon, 21 Jun 1999, 9:06pm EDT
Abbott Laboratories to Acquire Alza for US$7.3 Bln,
Take US$100 Mln Charge
By Jim Finkle
Abbott Offers $7.3 Billion to Buy Drugmaker Alza (Update1)
(Adds analyst comment, details of recent surge in shares.)
Abbott Park, Illinois, June 21 (Bloomberg) -- Abbott
Laboratories, a top seller of antibiotics and ulcer drugs, said
it will buy Alza Corp., the No. 1 U.S. maker of sustained-release
drugs, for $7.3 billion, adding new cancer and incontinence
medicines.
Each Alza share will be traded for 1.2 Abbott shares, or
$53.03, based on Abbott's closing price of 44 3/16. That's a 15
percent premium to Alza's closing price today of 46 1/4. Alza
shares soared 25 percent over the past week on expectations the
company would be acquired and were recently quoted at 48 in
Instinet trading.
It's Abbott's first purchase of another company since Chief
Executive Miles White took on the additional title of chairman in
April, promising to acquire new products to remain competitive in
the pharmaceutical and health-care industries. It gives Abbott's
sales force new products to promote and also brings royalties
from drugs, like SmithKline Beecham Plc's NicoDerm smoking-
cessation patch, which Alza has licensed to drugmakers.
''It's a good fit,'' said Alex Zisson, a Hambrecht & Quist
Group analyst with a ''buy'' recommendation on Alza shares.
Abbott said it will take a one-time charge of approximately
$100 million in 1999 and will restate earnings for the year after
the deal closes. The purchase will reduce its 2000 profit by
about 3 cents a share and will add to profit in 2001.
The purchase is the latest in a series of deals engineered
by White, who was named CEO in September, promoting him from a
position running Abbott's medical-testing business. The company
has replaced nearly all of its senior executives over the past
year as it moves to boost sales in its most profitable
businesses, which include drugmaking.
Abbott's products range from infant formula to AIDS
medicines and medical testing equipment.
Earlier this month, Abbott said it would spend up to $335
million as part of an agreement to market HIV and hepatitis B
medicines with Triangle Pharmaceutical Inc. The deal also calls
for Abbott to acquire 17 percent of Triangle.
And in May, Abbott said it would team up with SangStat
Medical Corp. to sell drugs designed to prevent rejection of
transplanted organs.
Target
Zisson said he was surprised that Alza didn't hold out for a
higher price, given the relatively strong position the company is
in right now.
''I'm a little curious to know why they decided to throw in
the towel right before a new product cycle,'' Zisson said. ''Over
the long term we think Alza shareholders would have done pretty
well had they remained independent.''
Alza reported progress in development of several cancer
drugs over the past month and launched a direct-to-consumer
advertising campaign for its new incontinence pill Ditropan XL.
A Food and Drug Administration expert panel last week
recommended expanding use of Ethyol, a drug Alza developed with
U.S. Bioscience Inc. that helps protect against the ravages
caused by cancer-killing radiation therapy. The panel also voted
to support expanding use of Alza's Doxil chemotherapy drug as a
treatment for ovarian cancer.
The company late last month submitted a new drug application
with the Food and Drug Administration to market Viadur, a
prostate cancer treatment that works by suppressing testosterone
production and can be given once a year.
Alza in March completed its acquisition of Sequus
Pharmaceuticals Inc., which developed Doxil using liposomal
technology, by which a commonly used chemotherapy agent is
encapsulated in an artificial sphere. The sphere slows the immune
system's recognition of the drug, allowing it to remain in the
body longer than a non-coated drug.
Alza -- which is based in Palo Alto, California, the home of
Stanford University -- receives royalties on a series of products
that it developed and licensed to other drugmakers.
Those products include the NicoDerm CQ patch as well as
Johnson & Johnson's Duragesic patch for pain relief; and Pfizer
Inc.'s heart drug Procardia XL. |
