SmithKline May Spin Off 3 Units in Southland

SmithKline Beckman Corp., which stunned Wall Street last week when its president abruptly resigned, is considering spinning off its profitable health-care units, including two in Orange County and one in Van Nuys, Chairman Henry Wendt said Thursday.

“We have a commitment to unlock the value of our health-care businesses for the benefit of shareholders,” Wendt told reporters after a meeting with securities analysts.

“We are going to unlock and unbundle the potential value of these units by making them more separate and more visible,” Wendt told the analysts. He said the moves must be “managed and controlled carefully and with discipline” but provided no further details on the plans.

SmithKline stock closed down $1 a share Thursday at $51.625 on the New York Stock Exchange.

Wendt targeted the company’s Irvine-based Allergan Inc. eye-care division and its SmithKline Bio-Science Laboratory network of testing laboratories, as well as Beckman Instruments in Fullerton, for a partial sale. The Beckman subsidiary was partially spun off last year to a generally cool reception from Wall Street. SmithKline, based in Philadelphia, sold 17% of Beckman to the public and hinted at other spinoffs.

Allergan makes eye-care and skin-care products and employs 2,700 people in Southern California, according to the company. Sales rose 37% last year to $756 million. A company spokesman reiterated Thursday that Allergan has not been told whether part or all of the company will be sold to the public.

Beckman, which makes medical instruments, employs 3,500 in Southern California. Sales were $770 million last year, up 11%.

Bio-Science is headquartered outside Philadelphia but employs 1,500 and operates a big laboratory in Van Nuys. The unit had sales of $675 million last year, up 57%.

Wendt said he “shouldered the blame” for the drop in U.S. drug sales and acknowledged that SmithKline has not yet solved its strategic problem of excessive dependency on its anti-ulcer drug Tagamet. SmithKline, the nation’s eighth-largest drug company, has been striving to restore investor confidence because of declining sales of Tagamet.

Last year, Tagamet sales, which account for half of SmithKline’s total drug sales, dropped to $1.02 billion from $1.13 billion in 1987. In the United States, Tagamet sales fell 24.4% to $499 million.

The company has been a persistently rumored takeover target since it first announced a drop in Tagamet sales last June.

Last week, President George Ebright resigned over differences regarding the direction of the company, and some analysts said Ebright balked at Wendt’s plans to give greater autonomy to the company’s individual divisions.

Paine Webber analyst Ron Nordmann said after Thursday’s meeting that “management has held its plan for the future close to the vest” but added that investors should be reasonably reassured that the company’s business is basically solid.

But Neil Sweig, of Prudential-Bache, said the meeting held no surprises and added: “Fundamentally the company in 1989 is weak and the stock will be significantly weakened.”