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Biotech / Medical : CEPH - CEPHALON -- Ignore unavailable to you. Want to Upgrade?

To: Icebrg who wrote (55)	8/21/2003 3:13:10 PM
From: Icebrg	Read Replies (1) \| Respond to of 109

CIMA Labs Up 17% After Cephalon Makes Cash Buyout Bid DOW JONES NEWSWIRES By Hollister H. Hovey Of DOW JONES NEWSWIRES NEW YORK -- Cima Labs Inc. (CIMA) investors cheered Thursday after Cephalon Inc. (CEPH) swooped in with a $26 a share cash offer for the company that could throw a kink into the Cima's plans to be acquired by AaiPharma Inc. (AAII) in a stock swap announced earlier this month. Cephalon's offer represents a 10% premium to Cima shareholders based on Cima's Wednesday closing stock price of $23.58, but Cima shareholders have sent the shares well above that level to $27.30, or up 15.8%, or $3.72 a share on volume of 5 million compared with average daily volume of 392,500. Cima said its board will meet with its advisers to consider the proposal. On Aug. 5, AaiPharma agreed to merge in a $360 million stock deal. Cima's shares fell 84 cents to $23.77 that day. Terms of the deal call for each AaiPharma holder to receive one share of the new company for each AaiPharma share held. Cima holders would get 1.3657 shares of the new company for each of their Cima shares. The deal gave Cima shareholders very little premium at the time, although it was supposed to be immediately accretive for Cima. With the moves in the stocks Thursday, aaiPharma's offer is below Cima's current trading level. AaiPharma shares are down 2.9%, or 50 cents, to $16.79. Multiplied by 1.3657, that's only $22.93, $4.55 below Cima's current price. When the Cima-aaiPharma deal was announced, Cima investors questioned whether they wanted their company to take on aaiPharma's debt load. As part of the deal, Cima would use up most of its $134 million in cash and cash equivalents to help pay off aaiPharma's $260 million in debt. That would leave a combined company with $50 million in cash and $175 million in debt, according to Leerink Swann analyst Michael Hearle's estimates at the time. In a statement, aaiPharma said that under the agreement, Cima cannot enter into negotiations with a third party concerning a proposed alternative transaction unless the Cima board of directors concludes in good faith that the deal with Cephalon is more favorable. "We are confident that the definitive merger agreement entered into by aaiPharma and Cima offers superior value to Cima shareholders," said Dr. Philip S. Tabbiner, president and chief executive of aaiPharma said in a statement. Cima's merger with AaiPharma was expected to close in the fourth quarter. AaiPharma, a science-based company with 2002 revenue of $230.5 million, focuses on development and acquisition of new products. Cima, which had 2002 revenue of $46.6 million, focuses on drug delivery technology and product development. An Aaipharma spokesperson wasn't immediately available for comment. Aaipharma's shares traded recently on Nasdaq at $16.29, down $1, or 5.8%, on volume of 1 million shares. Average daily volume is 655,957 shares. Cephalon, a West Chester, Pa., biopharmaceutical company, posted 2002 revenue of $506.9 million. Cephalon's shares traded recently on Nasdaq at $43.45, down $1.41, or 3.1%. In a separate release, AaiPharma said it was confident the definitive merger agreement it signed with Cima offers "superior" value to Cima shareholders. AaiPharma said it doesn't foresee making any changes to the merger agreement in response to Cephalon's proposal and reaffirmed its offer would add to earnings immediately. Cephalon Chief Financial Officer Kevin Buchi said Thursday that the proposed acquisition of Cima is a "good strategic fit" for the company, citing Cima's profitable oral technology business. Buchi said the proposed acquisition isn't expected to be material to earnings in the near-term. He was unable to provide a long-term forecast because its offer is still subject to due diligence. By Hollister H. Hovey, Dow Jones Newswires, 201-938-5287; hollister.hovey@dowjones.com (Stephen Lee contributed to this report.) Updated August 21, 2003 1:28 p.m.