Bergen Brunswig Tacks Conditions to Offer : Acquisition: The modifications by the drug wholesaler, which is in a bidding war with Cardinal Distribution Inc., may have jeopardized its offer to buy Durr-Fillauer Medical Inc.

Bergen Brunswig Corp.’s $466-million offer to buy an Alabama competitor may be in jeopardy after the drug wholesaler added conditions Tuesday that would ban the smaller firm’s top executives from getting jobs with other competitors for at least two years.

Bergen Brunswig, based in Orange, is also asking Durr-Fillauer Medical Inc., based in Montgomery, Ala., to ensure that its two top customers would remain with the new, combined company.

“There are a whole lot of ifs here,” Durr-Fillauer spokeswoman Jennifer Wall said.

The “conditional” offer to acquire Durr-Fillauer for $33 a share was made on Aug. 18, topping a bid of $30.50 a share by Cardinal Distribution Inc. in Dublin, Ohio. Bergen Brunswig and Cardinal have been in a bidding war for Durr-Fillauer since early July.

Bergen Brunswig’s total purchase price would include $396 million in cash for Durr-Fillauer’s outstanding shares and assumption of $70 million in long-term debt, said Neil F. Dimick, Bergen Brunswig vice president. That would raise the company’s earlier bid by $7 a share.

Bergen Brunswig’s latest offer was made initially on the condition that Durr-Fillauer turn over contested documents outlining its financial condition and Cardinal’s merger offer. Those documents were turned over on Aug. 18. That same day, Bergen Brunswig sweetened its bid, which had been $26 a share.

Bergen Brunswig on Tuesday formalized that offer of $33 a share after reviewing the documents sent to it by Durr-Fillauer, Dimick said. The offer expires on Sept. 4.

“We think the offer that we put out is very fair,” Dimick said.

But Durr-Fillauer’s Wall said the employment agreements proposed for its top executives are not as favorable as Cardinal’s employment offers. The executives involved are W.A. (Bill) Williamson, Durr-Fillauer’s chairman and chief executive officer; President Charles Adair; and Vice Presidents M.W. Cotton and Collin Smith.

Under Cardinal’s proposal, Williamson, Adair and Smith would not be allowed to work for any competitor for three years after quitting the company, said a person familiar with the company. Cotton would be banned from working for any competitor for two years, said the source, who asked not to be identified.

Wall said Bergen’s proposed employment agreements contain post-employment work restraints, called non-competitive provisions, that involve longer time periods than those specified in the Cardinal offer.

Officials would not say how long Bergen Brunswig would require the Durr-Fillauer executives to stay out of the business.

Wall said Durr-Fillauer’s board of directors is considering Bergen Brunswig’s proposed employment agreements but does not seem happy about them. Williamson and Adair are both members of that board.

Bergen also is requiring proof from Durr-Fillauer that its two main customers, identified by sources as Sun Health Enterprises Inc. in Raleigh, N.C., and Volunteer Hospitals of America Inc. in Dallas, continue to do business with the combined firm.

Wall said the Durr-Fillauer board will likely make a decision by the end of next week on whether to accept or reject Bergen Brunswig’s latest offer.

Meanwhile, Cardinal’s chief financial officer, David Berman, said his company is still studying the Bergen Brunswig offer and has not decided whether to issue a counteroffer. If it does so, that would once again up the ante in the two-month-long bidding war.

“We wanted to see if it was a firm offer,” Berman said Tuesday. The addition of the conditions for employment and the requirement to guarantee the two top customers, he said, may affect both Durr-Fillauer’s and Cardinal’s decision-making process.

Steven Huffines, an analyst at the brokerage Sterne, Agee & Leach in Atlanta, said the bidding war has driven Durr-Fillauer’s stock up 51%, almost to the point at which the Alabama drug wholesaler is overpriced.

Durr-Fillauer, traded on the NASDAQ market, closed Tuesday at $33.25, up 25 cents a share from Monday’s close. Cardinal, also traded on NASDAQ, closed down 50 cents at $27.50. Bergen Brunswig, traded on the American Stock Exchange, closed at $18.25, down 12 cents.

While Bergen Brunswig’s takeover offer involves more cash per share, the Cardinal bid is considered more friendly to employees and customers.

In addition, because Cardinal’s offer is for a merger involving a stock swap, there are better tax advantages for Durr-Fillauer shareholders. Under the Bergen Brunswig proposal, however, some shareholders, including several members of Durr-Fillauer’s board, could face huge tax liabilities, Huffines said.

“The board has been put in something of a difficult position as to which interests it needs to have in mind,” said Huffines, who has followed the bidding war closely. “I wouldn’t put odds on (the outcome) one way or another.”