Syncor Discounts Talk That It Is Takeover Target
Despite a gain of more than 50% in its stock price over the last four days of trading, Sylmar-based Syncor International discounted speculation Wednesday that it has been targeted for a takeover bid.
Officials of the company, which operates the nation’s largest chain of radioactive drug pharmacies, attributed the run-up and the unusually heavy trading in its shares largely to the “halo effect” of the overall advance in biotechnology stocks.
Syncor, which trades in the over-the-counter market, closed Wednesday at $9.12 1/2, up 25 cents, on a trading volume of 302,200 shares. The stock, which as recently as January had an average trading volume of just 25,000 shares, has risen steadily since closing at $6 last Thursday.
Company officials and analysts said insider ownership of more than 30% of Syncor’s stock would discourage a hostile takeover effort. But they predicted that the company would become a likely merger candidate if it emerges from its history of sluggish earnings.
“We feel the company has potential, but the numbers aren’t there to justify someone paying a lot of money for us now,” said William A. Kemmel Jr., Syncor vice president and general counsel.
Even with improved results in its most recent quarter, Syncor posted earnings of only $641,601 on revenue of $68.3 million for the nine months ended Feb. 28.
Monty Fu, Syncor chairman and chief executive, said a recent favorable report by an analyst at Wedbush, Noble, Cooke Inc. in Los Angeles contributed to the rise in the company’s stock. He also cited recent interest in the company by institutional investors.
The company’s main business is its network of 74 pharmacies that prepare radioactive diagnostic drugs used at hospitals and clinics. Analysts say the broad distribution network that Syncor gained in merging last August with Albuquerque, N.M.-based Nuclear Pharmacy might make it a tempting acquisition for a biotechnology firm looking for a way to deliver its products.
Some analysts also have said that Syncor stands to gain business from the continuing development of bio-engineered drugs that must be combined with radio-pharmaceuticals before being given to patients. Thus, company officials said, the recent optimism on Wall Street for biotechnology issues has carried along Syncor stock.
By comparison, a group of six bellwether biotechnology stocks followed by the San Francisco-based brokerage firm of Hambrecht & Quist has risen 25% since last Thursday.
