SANOFI OFFER FOR ROBINS VALUED AT SAME $25 PER SHARE LEVEL AS AMERICAN HOME PRODUCTS AND RORER BIDS: SANOFI INDICATES WILLINGNESS TO BID HIGHER
Sanofi's accepted offer for A.H. Robins is valued at about $25 a share at the company's current stock price, Robins Senior VP Finance G.E.R. Stiles told a Jan. 7 press conference in New York City. Robins' financial advisor Drexel Burnham is said to have valued the Sanofi offer as similar to earlier bids by American Home Products and Rorer Group. In response to a question on the per-share value of the Sanofi offer, Stiles estimated: "$25 a share if the deal were done today . . . in that area." Robins' stock closed on Jan. 7 at 22-5/8. The press conference was held jointly by Robins and Sanofi to discuss the "amended plan and disclosure statement" for Robins' Chapter 11 reorganization, which includes the merger with Sanofi. The plan was filed in Richmond bankruptcy court on Jan. 6. Robins announced Jan. 2 that its board had approved the Sanofi offer. While Sanofi appears to have won this round of the contest for Robins, public comments by Robins shareholder groups and at least one suitor, American Home Products, indicate that Robins may receive sweetened offers from other bidders in the near term, forcing a higher offer from Sanofi. Sanofi Exec VP and Chief Operating Officer Jean-Francois Dehecq indicated that Sanofi would be willing to increase its offer for Robins if other bids came forward. "If there are other proposals, what I can say is that we are not here just for looking at Robins. We are here to fight for Robins," he told the press conference. American Home has reportedly said it would be willing to improve its current offer for Robins, which involves a $600 mil. stock exchange and the funding of a $2.48 bil. Dalkon Shield trust fund. Robins President and CEO E. Claiborne Robins, Jr., stated that, although as of Jan. 7 "we have received nothing in writing," management would be "required and have a fiduciary duty . . . to A. H. Robins and to its creditors until this is solved . . . to review any future proposal," from other suitors. One obvious attraction the Sanofi bid holds for Robins is the likelihood that the French company will keep Robins' management intact and its operations in Richmond, Va. Asked if an agreement with management had been reached, Sanofi's Dehecq said: "It is too early to have a discussion about the management of the company. What I can say is that looking at the past 12 years of Robins' [operations], I am sure there were a lot of very strong and good people in management of this company, because I see . . . increases in the business and profit." Under the merger plan, half of the new entity's board will be appointed by Sanofi. The agreement does not stipulate Robins' management except to note that after completion of the merger, "substantially all of the former Robins' officers will remain officers of New Robins, provided that changes may occur as deemed appropriate by the New Robins board of directors." When asked whether Robins' headquarters would remain in Richmond, Dehecq suggested that Sanofi would have no reason to relocate the firm since the French company has no other human drug business in the U.S. with which to consolidate Robins' operations. In an estimate of the liquidation value of the Robins business, the reorganization plan and disclosure statement put the value at between $1.8-$2.7 bil. In a breakdown of its operating segments, Robins estimates the sale value of its Elkins-Sinn generic drug business at $376.1 mil., domestic pharmacueticals at $526.8 mil., and consumer products (Chap Stick, Robitussin and Dimetapp) at $649.9 mil. However, Robins has already received a direct offer of $840 mil. for the consumer products business from Dow. The chemical company recently agreed to pay Rorer $950 mil. for that segment if Rorer's latest bid for Robins was successful. Sanofi's offer includes a provision for up to $1.24 bil. -- one-half the court-ordered $2.48 bil. Dalkon Shield set-aside -- in the two years immediately following the merger, according to Robins. Up to $2 bil. will be available to settle claims four years after finalization of the reorganization plan. The agreement provides that Robins will pay Sanofi $25-50 mil. in "break-up" fees if it selects another suitor. Under Robins' earlier agreement with Rorer, which has been preempted by the Sanofi agreement, Robins committed to paying $25-$75 mil. in break-up fees. The merger vehicle for Sanofi would be its U.S.-based animal health care subsidiary, CEVA, which, after the merger, would change its name to A.H. Robins, Inc. According to a Robins' press release, "as a result of the merger, Robins stockholders would receive 83% of the then issued and outstanding stock of the 'new' A.H. Robins Company, with 17% being retained by existing CEVA stockholders." Prior to the merger, Sanofi would purchase convertible notes and convertible preferred stock of CEVA for a $600 mil. aggregate price. Assuming full conversion and dividend payment, Sanofi would own 58% of the new company after five years. Robins selected Sanofi's offer despite a sweetened, eleventh-hour proposal from Rorer Group that would have increased from .55 to .685 the number of Rorer shares exchanged for each Robins share. Based on Rorer's Jan. 4 stock close of 37-1/2 and 24 Robins shares outstanding, the newer offer would have had a value to Robins shareholders in excess of $600 mil., compared to less than $500 mil. in Rorer's earlier offer. The next two important dates in the progress of the Sanofi offer are Jan. 14 and Feb. 19, according to a Robins spokesperson. A hearing in Richmond bankruptcy court on Robins' request for permission to terminate its agreement with Rorer and sign with Sanofi is slated for Jan. 14. Court consideration of the amended reorganization plan and merger with Sanofi will take place Feb. 19.
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