American Home Makes New Offer for Robins
A. H. Robins, which owes $2.5 billion to a trust fund for women injured by its Dalkon Shield contraceptive, said Wednesday that it received a takeover bid from American Home Products Corp. worth more than $3 billion.
The offer--the third competing bid for the drug company--includes $550 million in American Home Products’ stock and separate funding for the $2.475-billion trust fund established earlier this month to satisfy the hundreds of thousands of Dalkon Shield claimants.
The stock of American Home Products jumped $1.50 Wednesday to close at $73. Robins’ stock closed up $3.125 at $19.25.
Last Thursday, French drug maker Sanofi offered to purchase a controlling interest in Robins for $500 million and said it would guarantee payment of the Dalkon Shield fund.
In addition, Fort Washington, Pa.-based Rorer Group Inc. also has a proposed merger offer valued at $2.6 billion, including $1.8 billion for the Dalkon Shield fund. In a statement issued after the American Home Products’ offer Wednesday, Rorer said it was continuing its merger talks.
Rorer had promised to revise its offer following this month’s decision by a bankruptcy court judge to set the fund at $2.475 billion.
Last February, American Home Products made another bid of an undisclosed amount for Robins, but the offer was abruptly withdrawn after one week.
“We have reconsidered our interest in acquiring your company and have decided to submit to you and to the members of your board a new proposal . . . (that) is more advantageous to the stockholders of your company than the other proposals which you are considering,” American Home Products’ Chairman John R. Stafford wrote in a letter to Robins’ Chairman E. Claiborne Robins.
Richmond-based Robins’ products include well-known brands such as Robitussin cough syrup, Dimetapp cold medicine and Chap Stick lip balm. American Home makes Anacin, Advil, Preparation H and Dristan, among other products, and posted net sales of $4.9 billion last year.
It filed for bankruptcy in August, 1985, after it was hit with more than 300,000 claims linking its Dalkon Shield intrauterine device to injuries which included perforations of the uterus, sterility and pelvic diseases.
Wednesday’s offer by the New York-based drug and household products company gives American Home Products up to seven years to fund the $2.475 billion that must be set aside for Dalkon Shield claimants. It also said the firm would continue most of Robins’ businesses.
To pay for Robins’ assets, American Home Products would issue about 7.7 million of its own shares to Robins, worth about $562 million at current market prices. Robins said its management and advisers will consider the proposal and evaluate its effect on Robins’ present merger pact with Rorer and its pending proposal from Sanofi.
Robins must file an amended reorganization plan that takes into account a Dalkon Shield fund of $2.475 billion by noon Monday in federal bankruptcy court. U.S. District Judge Robert R. Merhige Jr. has set a public hearing on the plan for Feb. 19. Robins had originally offered to pay $1.75 billion over seven years for damage claims for the contraceptive device.
Robins spokesman Roscoe E. Puckett Jr. said Wednesday that he does not expect the Monday deadline to be changed. The latest offer means that Robins executives and lawyers “obviously will have to do a tremendous amount amount of work between now and Monday.”
