French Chemical Firm to Buy Maker of Maalox

Rhone-Poulenc S.A., a giant French chemical firm, agreed on Thursday to acquire Rorer Group Inc., in a deal valuing the American drug company at $3.2 billion, the companies said.

The newly combined company will be one of the top 10 pharmaceutical companies in the world. It will be led by Robert Cawthorn, who is Rorer’s chairman, president and chief executive, the companies said.

Under the terms of the preliminary agreement, Rhone-Poulenc would contribute nearly all of its worldwide pharmaceutical operations to Rorer in exchange for new Rorer stock and it would hold about a 68% equity in the new company, the companies said in a joint statement.

Under the agreement, each Rorer shareholder would receive a package valued at $73 a share of cash, stock in the newly combined company and a new security based on the performance of the newly combined company.

The deal is modeled on a transaction earlier this year between Dow Chemical Co. and Marion Laboratories in which Dow bought a controlling share in Marion for $2.2 billion.

Rorer, based in Ft. Washington, Pa., has been a longstanding target of takeover speculation. Its best-known product is Maalox, the No. 1-selling antacid.

Rorer, along with Schering-Plough Inc. and Warner Lambert Inc., has been a target of speculation because of its over-the-counter drugs, which supply a rich cash flow from recognized brand names.

Mehta & Isaly analyst Viren Mehta said the proposed terms involving cash and securities “is a reasonably decent premium but it is not outrageous. Someone committed to the line of business that Rorer is in could justify paying more.”

Rorer said Monday that it was in negotiations to sell about 68% of its stock to another company, which it did not identify, for about $73 a share.

Rorer’s stock closed down 75 cents at $62.875 in New York Stock Exchange trading.

The merger announcement was made after the stock market closed.