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| Watson Acquires Generic Rival Schein In an Acquisition Worth $660 Million.(Brief Article)(Statistical Data Included) Issue: May 29, 2000 WATSON PHARMACEUTICALS Inc. is acquiring generic drug rival Schein Pharmaceutical Inc., including all the outstanding stock of Schein, through a two-step transaction of a cash tender followed by a stock merger. The deal's potential value is estimated at more than $660 million. Watson will offer a cash tender of $19.50 per share of Schein common stock pursuant to the merger. Each Schein share will be converted into $23 of Watson common stock, subject to adjustment. Once Watson completes the tender offer, it will acquire the remaining shares of Schein's outstanding common stock through a merger of a wholly owned subsidiary into Schein. Upon closing, each outstanding share of Schein's common stock will be converted into the right to receive a fraction of a share of Watson common stock valued at $23. Watson has also entered into stockholder agreements with Bayer Corporation and members of the Schein family, who collectively own roughly 74 percent of the outstanding shares of Schein's common stock. Under those agreements, the stockholders are expected to tender their shares of Schein common stock to Watson, meeting a minimum requirement of 24.5 million shares. Based on the $19.50 tender offer, that part of the deal would be worth $477.8 million. The tender offer is expected to close in late June or early July, and Watson expects to complete the merger in late August or early September. On a reported earnings per-share basis, the acquisition is expected to be dilutive to earnings in the second half of 2000 and modestly accretive in 2001. Schein's problems include a history of failure to comply with government manufacturing rules. FDA shut down its plant in Phoenix, Ariz., in 1998, although that facility restarted the following October. Schein has also twice suspended production at its Cherry Hill, N.J., plant because of FDA warnings. The company recently reported a first quarter loss of $8.9 million. COPYRIGHT 2000 Schnell Publishing Company, Inc. COPYRIGHT 2000 Gale Group |
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| Terms related to this article: Pharmaceutical industry / Acquisitions, mergers, divestments
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