Post by miamianne67 on Mar 3, 2018 15:44:43 GMT
When I tell you folks that some of you have no idea what we went thru with Ivax and some should have done more dd on Dr. Frost, well- here's another example. I post this just to show that Dr. Frost has a history of rearranging the pieces of the puzzle and that we should all expect it and be more --- sanguine. Miami
Business Week
In Rare Merger, Drug Maker Will Be Bought By Wholesaler
By MILT FREUDENHEIMNOV. 12, 1996
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Announcing an unusual pharmaceutical merger that many investors found confusing, the Bergen Brunswig Corporation, one of the nation's biggest drug wholesalers, said yesterday that it would buy the Ivax Corporation, a financially troubled maker of low-cost generic drugs, for $1.66 billion in Bergen Brunswig's stock.
Executives of Bergen Brunswig acknowledged that the deal, a rare case of a drug wholesalers buying a drug maker, involved considerable risk, but they said that there would eventually be a big payoff and that earnings per share would grow, starting next year.
Still, both companies' shares fell sharply yesterday. Ivax lost 21 percent, dropping $3.375, to a 52-week low of $12.50, on the American Stock Exchange. Bergen Brunswig fell $5.125, or 15.6 percent, to close at $27.625 on the New York Stock Exchange.
Ivax stock plunged earlier this year as the company said its earnings in the volatile generic-drug business would disappoint investors. As a result of charges Ivax was taking against earnings, it said it would be in violation of bank loan agreements. The company said yesterday that it was negotiating amended deals with creditors.
Under the accord, first reported yesterday in The Wall Street Journal, Ivax shareholders are to receive 0.42 share of the new company, the BBI Healthcare Corporation, for each Ivax share -- valuing Ivax at $11.6025 based on yesterday's prices. Ivax shareholders are to own 56 percent of the new company. Bergen Brunswig stockholders will get one share of BBI for each of their current shares. The deal would be valued at $1.4 billion at yesterday's prices.
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Bergen Brunswig is paying a discounted price for Ivax, reflecting that company's financial difficulties. ''They are in real trouble and need money to rescue them,'' said Jerry Treppel, a drug analyst with Dillon, Read & Company.
Donald R. Roden, the president of Bergen Brunswig, will be chief executive of BBI. He said in a telephone interview yesterday that the merger could eventually quadruple Bergen Brunswig's $2 billion annual sales of generic drugs, the most lucrative part of its $9.9 billion annual revenue in a generally low-margin wholesale drug business.
Generics are prescription drugs that have lost patent protection. Although they cost one-third or less of the patented originals' prices, pharmacists like them because the profit margins are higher on generics.
Bergen Brunswig said it had recently persuaded 5,000 of the nation's 42,000 retail pharmacies to buy generics in a discount program and to let it supervise the flow of deliveries. Bergen Brunswig hopes to direct a growing share of this business to Ivax.
Phillip Frost, the founder and chief executive of Ivax, said the combination, which must be approved by shareholders of both companies and regulators, would eliminate uncertainty for Ivax in the difficult generic market, where price-cutting competitors can abruptly puncture a competitor's sales projections.
But securities analysts said Dr. Frost, a visionary deal maker whose net worth was estimated at $490 million last month by Forbes magazine, has had his ups and downs as a manufacturing executive. One of his biggest deals collapsed late last year, when shareholders of Hafslund Nycomed of Norway rejected a stock-swap merger with Ivax.
Dr. Frost and Robert E. Martini, the chief executive of Bergen Brunswig, will be co-chairmen of BBI. Although Ivax shareholders will have 56 percent of the BBI shares, Bergen will have 9 of the 17 board seats.
Steven B. Gerber, a pharmaceutical analyst in Los Angeles with Oppenheimer & Company, said he expected ''a lot of scrutiny before Bergen Brunswig shareholders are convinced that this is a deal that will be beneficial to their interests.''
Mr. Gerber said Ivax had two big problems -- ''retaining solid operating management'' and integrating a number of widely different businesses, most of which have been unable to deliver much in terms of profit performance.
Mr. Roden said he planned to hire outsiders and promote Ivax executives to create a new management team. It would streamline North American operations, which include a new pharmaceutical factory near Montreal that Ivax recently agreed to buy from Glaxo Wellcome.
''It strikes me as a bit far afield for Bergen to take over the role of combined manufacturer and distributor,'' said Larry Marsh, a health care analyst with Salomon Brothers. But Kevin E. Silverman of Everen Securities in Chicago, saw ''a big strategic positive for Bergen, with better growth and better profitability.''
Ronald Nordmann, an analyst with Deerfield Management, a health care investment firm, said he expected that many of the diverse Ivax portfolio of companies -- including hospital supplies, cosmetics and hair care products, and specialty chemicals -- would be sold.
That would leave a core including Zenith Pharmaceuticals generic factories, the generic distributor Goldline, a small line of patent-protected drugs with some promising new products and a big generic business in Britain.
''Bergen is buying a business with higher profit potential but with a lot more risk,'' Mr. Treppel said. ''Manufacturing and distribution are very different businesses. They will always fight over who you are going to maximize.''
Mr. Treppel said another question was how the other big drug wholesalers would react. The McKesson Corporation, which is expanding by acquiring Foxmeyer, a troubled wholesaler, is offering pharmacies computer software to tie in their sales. Cardinal Health Inc., another big wholesaler, recently acquired the Medicine Shop pharmacy chain and Pyxis, a hospital-based drug-dispensing business.
Another troubled generic drug maker, Copley Pharmaceutical Inc., recently said it had hired Oppenheimer as investment banker. The majority holder of Copley, Hoechst of Germany, has indicated that it may be seeking to sell its stake.
Business Week
In Rare Merger, Drug Maker Will Be Bought By Wholesaler
By MILT FREUDENHEIMNOV. 12, 1996
Continue reading the main storyShare This Page
Share
Tweet
More
Save
Announcing an unusual pharmaceutical merger that many investors found confusing, the Bergen Brunswig Corporation, one of the nation's biggest drug wholesalers, said yesterday that it would buy the Ivax Corporation, a financially troubled maker of low-cost generic drugs, for $1.66 billion in Bergen Brunswig's stock.
Executives of Bergen Brunswig acknowledged that the deal, a rare case of a drug wholesalers buying a drug maker, involved considerable risk, but they said that there would eventually be a big payoff and that earnings per share would grow, starting next year.
Still, both companies' shares fell sharply yesterday. Ivax lost 21 percent, dropping $3.375, to a 52-week low of $12.50, on the American Stock Exchange. Bergen Brunswig fell $5.125, or 15.6 percent, to close at $27.625 on the New York Stock Exchange.
Ivax stock plunged earlier this year as the company said its earnings in the volatile generic-drug business would disappoint investors. As a result of charges Ivax was taking against earnings, it said it would be in violation of bank loan agreements. The company said yesterday that it was negotiating amended deals with creditors.
Under the accord, first reported yesterday in The Wall Street Journal, Ivax shareholders are to receive 0.42 share of the new company, the BBI Healthcare Corporation, for each Ivax share -- valuing Ivax at $11.6025 based on yesterday's prices. Ivax shareholders are to own 56 percent of the new company. Bergen Brunswig stockholders will get one share of BBI for each of their current shares. The deal would be valued at $1.4 billion at yesterday's prices.
Continue reading the main story
Advertisement
Continue reading the main story
Bergen Brunswig is paying a discounted price for Ivax, reflecting that company's financial difficulties. ''They are in real trouble and need money to rescue them,'' said Jerry Treppel, a drug analyst with Dillon, Read & Company.
Donald R. Roden, the president of Bergen Brunswig, will be chief executive of BBI. He said in a telephone interview yesterday that the merger could eventually quadruple Bergen Brunswig's $2 billion annual sales of generic drugs, the most lucrative part of its $9.9 billion annual revenue in a generally low-margin wholesale drug business.
Generics are prescription drugs that have lost patent protection. Although they cost one-third or less of the patented originals' prices, pharmacists like them because the profit margins are higher on generics.
Bergen Brunswig said it had recently persuaded 5,000 of the nation's 42,000 retail pharmacies to buy generics in a discount program and to let it supervise the flow of deliveries. Bergen Brunswig hopes to direct a growing share of this business to Ivax.
Phillip Frost, the founder and chief executive of Ivax, said the combination, which must be approved by shareholders of both companies and regulators, would eliminate uncertainty for Ivax in the difficult generic market, where price-cutting competitors can abruptly puncture a competitor's sales projections.
But securities analysts said Dr. Frost, a visionary deal maker whose net worth was estimated at $490 million last month by Forbes magazine, has had his ups and downs as a manufacturing executive. One of his biggest deals collapsed late last year, when shareholders of Hafslund Nycomed of Norway rejected a stock-swap merger with Ivax.
Dr. Frost and Robert E. Martini, the chief executive of Bergen Brunswig, will be co-chairmen of BBI. Although Ivax shareholders will have 56 percent of the BBI shares, Bergen will have 9 of the 17 board seats.
Steven B. Gerber, a pharmaceutical analyst in Los Angeles with Oppenheimer & Company, said he expected ''a lot of scrutiny before Bergen Brunswig shareholders are convinced that this is a deal that will be beneficial to their interests.''
Mr. Gerber said Ivax had two big problems -- ''retaining solid operating management'' and integrating a number of widely different businesses, most of which have been unable to deliver much in terms of profit performance.
Mr. Roden said he planned to hire outsiders and promote Ivax executives to create a new management team. It would streamline North American operations, which include a new pharmaceutical factory near Montreal that Ivax recently agreed to buy from Glaxo Wellcome.
''It strikes me as a bit far afield for Bergen to take over the role of combined manufacturer and distributor,'' said Larry Marsh, a health care analyst with Salomon Brothers. But Kevin E. Silverman of Everen Securities in Chicago, saw ''a big strategic positive for Bergen, with better growth and better profitability.''
Ronald Nordmann, an analyst with Deerfield Management, a health care investment firm, said he expected that many of the diverse Ivax portfolio of companies -- including hospital supplies, cosmetics and hair care products, and specialty chemicals -- would be sold.
That would leave a core including Zenith Pharmaceuticals generic factories, the generic distributor Goldline, a small line of patent-protected drugs with some promising new products and a big generic business in Britain.
''Bergen is buying a business with higher profit potential but with a lot more risk,'' Mr. Treppel said. ''Manufacturing and distribution are very different businesses. They will always fight over who you are going to maximize.''
Mr. Treppel said another question was how the other big drug wholesalers would react. The McKesson Corporation, which is expanding by acquiring Foxmeyer, a troubled wholesaler, is offering pharmacies computer software to tie in their sales. Cardinal Health Inc., another big wholesaler, recently acquired the Medicine Shop pharmacy chain and Pyxis, a hospital-based drug-dispensing business.
Another troubled generic drug maker, Copley Pharmaceutical Inc., recently said it had hired Oppenheimer as investment banker. The majority holder of Copley, Hoechst of Germany, has indicated that it may be seeking to sell its stake.