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This article was originally published in The Tan Sheet

Executive Summary

BRADLEY PHARMACEUTICALS ACQUIRING CONTROLLING SHARE OF DOAK PHARMACAL for approximately $ 2 mil., Bradley said Oct. 20. Under a letter of intent agreement, Bradley will acquire almost 67% of Doak voting stock from Doak Chairman and CEO John Krafchuk, MD, and President Loma Adams. Bradley noted that it expects to gain effective control of Doak, a manufacturer of OTC preparations, within 45 days. In exchange for the Doak voting stock, Bradley is offering $ 1.3 mil. in cash, $ 400,000 of Bradley interest-bearing notes repayable over the six years following the closing of the deal, and warrants to acquire 60,000 shares of Bradley Class A common stock. Bradley also agreed to repay $ 120,564 of Doak long-term debt upon closing of the deal, and an additional $ 120,565 of long-term debt with 9% interest one year after closing. Also as part of the agreement, Adams will join Bradley as a sales and marketing consultant for the two years following completion of the acquisition, and Bradley will be granted an option exercisable for the three-year period following the closing of the deal to acquire the principal headquarters of Doak for "an amount based upon fair- market value." Founded in 1931, Doak Pharmacal manufactures and distributes a variety of OTC dermatologic products for cosmetic and pharmaceutical uses under the Doak Dermatologic and Formula 405 names, including Formula 405 Solar Lotion SPF #8 Paba Free; Formula 405 Solar Lotion SPF #15 Water Resistant; Solar Cream SPF 15 sun block; Doak Tar Lotion for the relief of itching and scaling due to psoriasis; Lavatar, an antipruritic; and Formula 405 moisturizing lotion, cleansing lotion and moisturizing soap. Doak accrued $ 1.8 mil. in sales and $ 106,257 in earnings for the fiscal year ended Oct. 31, 1992. In the nine months ended July 31, Doak reported $ 1.1 mil. in sales and a loss of $ 3,940. Bradley characterized the Doak Pharmacal deal as its "most significant acquisition to date" and said that Doak products will "add a tremendous potential to our dermatologic operations," which consist of wart removal products, a dandruff shampoo and acne medications. The Doak agreement represents Bradley's fifth acquisition in the past 11 months and its eighth since the firm was founded in 1985. Previous Bradley acquisitions have included the Duadacin OTC cold and allergy brand from Hoechst-Roussel and the Neoloid castor oil laxative brand from Lederle. More recently, Bradley acquired from Tsumura Medical a line of OTC wart removal products, PediaPatch and PlantarPatch, two ethically promoted wart removal products, and a mouth moisturizer, Glandosane ("The Tan Sheet" April 12, p. 15).

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