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Executive Summary

DOW PICKING UP PIONEER PHARMACEUTICALS, GENERIC BUSINESS, via the acquisition of Essex Chemical. The Essex deal, which reached a definitive merger agreement on Sept. 6, is set for $ 36 per share ($ 366 mil.). Essex is primarily a diversified international manufacturer and marketer of industrial chemicals, refrigerant gases and organic intermediates. Pioneer, located in Irvington, N.J., will operate separately from Dow's existing $ 1.1 bil. drug business, Merrell Dow. The generic operation is a very small part of Essex. It is lumped into a grouping of other businesses which had a total of $ 17.9 mil. in sales for Essex in 1987. Pioneer's results have been slowed recently by a weak approval record: the company had no ANDA approvals in 1987. That pace has picked up in 1988. Beginning with an approval for a sustained release antihistamine/decongestant (Resporal) in mid-June, Pioneer has received four ANDAs this summer, including chlorthalidone and chlordiazepoxide in July. None have been first ANDA approvals. Dow will also be getting a manufacturer of pharmaceutical intermediates, Orsynex, in the Essex acquisition. Located in Columbus, Ohio, Orsynex produces intermediates for antibiotics, antivirals and antihypertensives. The Essex agreement with Dow is the latest development in a contest for Essex that began in May with an unsolicited offer from Essex's joint venture partner in Europe, Gurit-Heberlein AG. Gurit, a chemicals and textile-finishing firm based in Switzerland, originally offered $ 24 a share, then raised the bid to $ 30 per share. Essex obtained a court order temporarily barring Gurit from pursuing its offer while Essex reviewed other possibilities. The Essex board has approved the Dow merger.

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