RHONE-POULENC BEGINS TENDER OFFER FOR RORER; DEAL SET TO CLOSE BY END OF JUNE
Rhone-Poulenc began a $78 a share tender offer for one-half of Rorer's outstanding shares on March 16. The two companies announced a definitive merger agreement earlier in the week on March 12. Following completion of the merger, Rhone-Poulenc will own 68% of the new company, Rhone-Poulenc Rorer, Inc. The new entity combines the pharmaceutical operations of the French firm with the Rorer operation and does not include other Rhone-Poulenc Health Sector businesses, such as vaccines, animal health and nutrition and Rhone's interest in Roussel Uclaf. The definitive deal puts a value of about $73 on each share of Rorer stock, according to the two companies. Rorer and Rhone-Poulenc earlier had agreed on that price in an agreement-in-principle to merge, announced Jan. 18 ("The Pink Sheet" Jan. 22, p. 3). Following the offer, which is based on a minimum of 32.4 mil. Rorer shares being tendered, Rhone-Poulenc will transfer its worldwide human pharmaceutical assets and issue contingent value rights (CVRs) equal to the remaining number of outstanding Rorer common stock held by Rorer shareholders. Rorer will assume approximately $265 mil. in Rhone-Poulenc debt, purchase the firm's U.S. drug business for $20 mil. and issue to Rhone-Poulenc about 24 mil. Rorer shares to bring the French firm's ownership in Rorer up to about 68%, according to a March 12 release. Rorer will then distribute the CVRs to its other shareholders, with each CVR entitling the holder to receive from Rhone-Poulenc, at the maturity date, an amount by which the target price of $98.26 exceeds the greater of the average market value of the Rorer common shares prior to the maturity date or a floor price of $52. Rhone-Poulenc is, in effect, offering current shareholders$78 per share now for half of their shares and guaranteed rights to $98.26 per share in three years. The CVRs also will be traded separately, adding to the investment interest. The full price for the deal calculates out to just over $3 bil.
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