Takeover Rumors Follow F. Hoffman-LaRoche Action
Swiss drug giant F. Hoffmann-La Roche & Co. asked Friday for trading of its shares to be suspended pending an announcement on Monday, triggering market rumors that it might launch a major takeover or a restructuring.
Immediately following the unusual announcement rumors swept through European and U.S. markets that Roche, the jilted suitor of U.S. drug company Sterling Drug, was planning to acquire another major pharmaceutical firm, namely Syntex Corp.
Shares of Syntex jumped $2.875 to $47.25 and was the most actively traded stock on the New York Stock Exchange. Syntex declined comment, citing company policy.
Roche said in a statement it would divulge “a series of measures which are of considerable significance for the structure and future development of the Roche group.” A company spokesman declined to elaborate.
Sources close to Roche said the company has been looking seriously at Syntex and U.S. drug concern Rorer Group Inc., which markets a successful line of non-prescription medicines.
Named as Likely Suitor
U.S. analysts generally ruled out the possibility that Roche was interested in SmithKline Beckman Corp. because of lock-out provisions in its merger agreement with Beecham Group PLC. Swiss and U.S. analysts said Roche’s other potential targets include Schering-Plough Corp., Marion Laboratories Inc. and Warner-Lambert Co., but Syntex was the focus of much of the speculation Friday.
Roche has been repeatedly named as a likely suitor for a U.S. drug company after its unsuccessful and hostile $4.2-billion bid for Sterling Drug last year. Sterling was subsequently bought by Eastman Kodak Co. for $5.1 billion.
Roche’s bid for Sterling prompted a wave of takeover speculation in the lucrative and clubby U.S. pharmaceutical industry, which is now undergoing the biggest consolidation in its history.
Swiss and U.S. analysts, however, believe Roche will not announce a takeover Monday but instead may unveil a restructuring of its expensive shares and dividend rights certificates and outline the reorganization of its large chemicals business.
“Roche is under siege and they will have to restructure and make an acquisition,” said independent pharmaceutical analyst Hemant Shah, a former employee at Roche’s U.S. headquarters in Nutley, N.J.
Rumored to Have War Chest
Shah said Roche invested hundreds of millions of dollars in fine chemicals about 15 years ago and is now losing business to lower-priced Japanese and other foreign competitors. Chemicals accounts for more than half of Roche’s revenue.
Roche has been rumored for months to be building a huge war chest for an acquisition. A revamp of Roche’s 50-year-old share structure could help finance potential takeovers by widening its shareholder base, analysts said.
