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BERGEN BRUNSWIG RAISES OFFER FOR DURR-FILLAUER: $33 A SHARE

Executive Summary

BERGEN BRUNSWIG RAISES OFFER FOR DURR-FILLAUER: $33 A SHARE for all shares outstanding, according to an Aug. 18 letter from Bergen Chairman Robert Martini to Durr-Fillauer's board of directors. A 27% increase over Bergen's July 7 bid of $26 a share, the latest offer is conditional: prior to making a firm offer, Bergen said it must review confidential information supplied by Durr-Fillauer and determine if the information "supports our current valuation" of the company. According to estimates made by Bergen in a proxy statement for its July 7 offer, there are 11.9 mil. common shares of Durr- Fillauer stock outstanding, or about $393 mil. worth at Bergen's latest bidding price. If stock incentive plans, options, and convertible subordinated debentures are taken into account, Bergen estimates the number of fully diluted outstanding shares to be 14.4 mil. Aside from the price per share, the terms of Bergen- Brunswig's first proposal "remain unchanged" in the newest offer, the company said. Bergen gained access to Durr-Fillauer's confidential financial information as part of an Aug. 17 limited settlement of the litigation pending between the companies. Bergen-Brunswig had been pursuing the information, as well as access to Durr-Fillauer's board, in Delaware chancery court. Under the settlement, Durr-Fillauer "will promptly provide to Bergen Brunswig all the confidential information Durr-Fillauer provided to Cardinal," Bergen said. Another condition of the agreement is Bergen's promise that by Sept. 4 it will either raise its offer for Durr above the $30.50 per share previously offered by Cardinal Distribution or "abandon its efforts to acquire Durr- Fillauer." Durr-Fillauer will also "give Bergen Brunswig access to Durr-Fillauer officers for the purpose of a due diligence inquiry," while Bergen Brunswig agreed "to keep all such information confidential." Durr-Fillauer had initially refused to provide nonpublic information to Bergen, saying that it would not be in Durr shareholders' best interests for the company to provide sensitive information to a major competitor ("The Pink Sheet" July 27, In Brief). Other litigation is a possibility if Durr-Fillauer turns down Bergen's offer, Bergen Brunswig acknowledged. In the Aug. 18 letter, Martini again reminded the Durr-Fillauer board of its "fiduciary duties to your shareholders" not to recommend the Cardinal offer over Bergen's, which he called "clearly superior." Bergen Brunswig said it is pursuing "several other lines of legal inquiry" which could be used if Durr-Fillauer rejects the offer. Cardinal and Bergen Brunswig have been caught up in an escalating bidding war for Montgomery, Ala.-based Durr-Fillauer since Cardinal's June 2 offer of $166.5 mil. in stock for Durr Drug alone ("The Pink Sheet" June 8, p. 9). On July 7, Bergen proposed to buy all of Durr-Fillauer for $26 per share in cash and filed 12 court actions in Delaware chancery court seeking to prohibit Durr-Fillauer's board from recommending Cardinal's offer and to force the board to consider Bergen's proposal. Cardinal responded by raising its bid to $30.50 per share in Cardinal stock for all of Durr-Fillauer. Durr and Cardinal had termed this a "definitive agreement" ("The Pink Sheet" July 20, T&G-1). Durr-Fillauer shareholders apparently were counting on a higher bid; as of Aug. 14, Bergen reported that only 33,109 Durr- Fillauer shares had been tendered pursuant to its July 7 offer.
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