ICN Board OKs Repurchase of Own Shares, Plus Viratek and SPI Stocks
ICN Pharmaceuticals Inc. said Monday that its board has authorized the purchase of up to 3 million of its own common shares, as well as the purchase of up to 500,000 shares each of its Viratek Inc. and SPI Pharmaceuticals Inc. subsidiaries.
The repurchases represent 15.1% of ICN shares, 6.3% of Viratek shares and 5% of SPI shares
Lawence Panitz, ICN’s chief operating officer, said the buy-backs are in the best interests of ICN shareholders because at current prices the securities are a “good investment.”
Costa Mesa-based ICN said the purchases could be made in open market transactions, private purchases or in block trades at or near market prices. Panitz said there is no deadline for making the purchases.
Because earnings per share would be increased, the buy-backs could benefit existing shareholders. Nevertheless, investor reaction to the news was mixed Monday with ICN falling $1 to close at $18.75 a share. Viratek was unchanged at $43 a share and SPI gained 50 cents to close at $25.25 a share.
At annual meetings of ICN and Viratek shareholders last week, company officials said ICN is conducting an investigation into reports that Viratek and ICN shareholders have been contacted by representatives of Gilford Securities, a Chicago-based brokerage, recommending sale of their shares.
Birch Bayh, a former U.S. senator and a director of Viratek, would not say whether the company believes violations of U.S. securities laws may have occurred, and Robert Holmens, Gilford’s president denied any wrongdoing in his firm’s advising Viratek’s institutional holders to sell the stock.
“We feel that the stock was rather dramatically overpriced relative to its earnings outlook,” Holmes said in an interview last week. The stock, he said, has run up on ICN’s “penchant for telling an overly optimistic story.”
Holmes added that while Gilford itself does not trade securities for its own account, its officers and employees “from time to time have taken short positions in both ICN and Viratek stocks and probably will continue to do so.”
Analysts said one possible reason for the stock repurchases would be to help support ICN’s and Viratek’s share prices. Indeed, if all the shares authorized for repurchase were bought, ICN would control about 55% of Viratek and about 85% of SPI, Panitz said.
ICN’s directors previously have authorized the purchases of up to 1 million Viratek shares and up to 500,000 shares of SPI. So far, ICN has purchased approximately 800,000 shares of Viratek and 400,000 shares of SPI.
