Nelson Research Rejects Takeover Bid From Ethyl

Nelson Research & Development Co., an Irvine drug developer that has yet to cash in on its research, said Friday that its directors have rejected an unsolicited $45-million takeover bid from Ethyl Corp., a Richmond, Va., chemical and petroleum products maker.

But Nelson Research said in a prepared statement--and an Ethyl spokesman confirmed--that negotiations for “mutually acceptable terms of an acquisition” are continuing.

Executives at both companies refused to discuss any further aspects of the negotiations.

Ethyl’s $5-a-share offer to purchase the company was revealed after the stock market closed Dec. 12 when Nelson Research’s stock stood at $3.25 a share. Nelson’s common stock closed Friday at $5.125 a share with 105,900 shares, or about 1.2% of the company’s 9.2 million shares, changing hands in over-the-counter trading.

In preparing for its takeover bid, Ethyl had purchased 1.27 million shares, about 13.8% of Nelson Research’s common stock, from company founder Eric L. Nelson for $5 per share. Nelson left the helm of the 13-year-old company early this year but remains a director.

Nelson Research attracted attention in the early 1980s with the development of Azone, a patented product that makes the skin more porous and allows topically applied drugs to penetrate the skin more quickly.

But since its last profitable year--1983--the company has posted net losses totaling $4.44 million, including a net loss of $1.8 million on revenues of $2.1 million in the first nine months this year.

Ethyl, which recorded a $117-million net income on revenues of $1.5 billion in 1985, has been funding drug-related research at several companies in recent years, according to an industry analyst.