McGaw of Irvine Agrees to $440-Million Takeover : Merger: Consolidation with a Florida drug firm reflects anticipation of reforms in the health-care industry.

Continuing a trend of rapid consolidation in the health-care industry, McGaw Inc. said Wednesday it has agreed to be taken over by a Florida maker of generic drugs.

The tentative acquisition by IVAX Corp. of Miami is valued at $440 million and would involve a stock swap in which original McGaw shareholders would double their investment.

McGaw officials said the majority of stock in each company is owned by insiders, including board members who approved the deal. “We don’t see any problem with this going through,” said James M. Sweeney, chairman and chief executive officer of McGaw.

IVAX officials were not available for comment.

McGaw began searching for a merger partner last spring after it became apparent that pending changes under national health-care reform would make specialty firms like McGaw less competitive.

The company makes intravenous solutions that are mixed with drugs and sent to hospitals, clinics and home health-care companies. McGaw also developed and makes a non-polluting, plastic IV bag that was lauded by Vice President Al Gore and on which it holds a patent; and it has an exclusive contract with the U.S. Department of Veterans Affairs.

Company officials said some customers are concerned that they cannot buy both intravenous solutions and drugs from a single supplier. “Basically, we need to have a complete line of products to offer if we are going to prosper in the future,” said McGaw spokesman Lawrence A. Watts.

After discussing a possible takeover with several drug manufacturers, McGaw settled on IVAX as best suited to become its parent company. IVAX, which had 1992 revenue of $451 million and is expected to show 1993 revenue of $600 million, is one of the nation’s leading manufacturers of generic drugs, Sweeney said, and is poised to grow.

“It’s a good match,” said Sweeney, who bought the company in 1990. “We think the generic side of the drug business is where the action is.”

McGaw had 1992 revenue of $309 million and sales of $84 million for its latest quarter. The company has an estimated $150 million in debt, which IVAX would assume, putting the acquisition’s actual value close to $600 million. The deal, expected to be finalized by March, requires approval of the U.S. Securities and Exchange Commission and shareholders from both companies.

McGaw shareholders will profit handsomely. McGaw began selling stock publicly in February, offering shares at $8 apiece. Under the proposed takeover, McGaw shareholders would receive $16 worth of IVAX stock for each of their McGaw shares, Sweeney said.

McGaw’s stock, traded on the Nasdaq market, closed Wednesday at $10.75 a share, down 12.5 cents. IVAX, traded on the American Stock Exchange, closed at $28.125 a share, up 50 cents.

There will be no layoffs at McGaw’s Irvine headquarters after the merger, Sweeney said, though the board of directors and the chief executive job will be dissolved. The operation will continue to use the McGaw name, he said.

Sweeney said he will stay on as an executive strategy adviser for both the parent company and the new subsidiary.