ICN Announces Plan to Merge With Affiliates : Streamlining: New firm would keep ICN Pharmaceuticals name and have $500 million in sales.
ICN Pharmaceuticals in Costa Mesa said Thursday that it plans to streamline its operations by merging with its three affiliates, creating a new company with $500 million in annual sales.
If shareholders and federal regulators approve the proposal, the new company, which will keep the name ICN Pharmaceuticals, would begin trading on the New York Stock Exchange this fall.
“Truly, this will increase value for all our shareholders,” said Milan Panic, chairman of ICN, who would head the consolidated company as chairman, president and chief executive.
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The proposal would merge ICN with SPI Pharmaceuticals, Viratek and ICN Biomedicals. ICN is now part owner of the other three companies. All four are based in Costa Mesa and are publicly traded. Panic is chairman of all four.
Analysts and shareholders applauded the proposal as a positive move for ICN, which vowed earlier this year, after winning a bitter proxy battle against dissident stockholder Rafi M. Kahn, to be more attentive to investors’ concerns.
“I think it’s an outstanding program. Given the uneven management this company has shown, I’m surprised they’ve come up with something as intelligent as this,” said Seth Glickenhaus, partner with Glickenhaus & Co. of New York, an investment fund and ICN investor. “It focuses their attention in one direction instead of four, reduces debt costs and has substantial tax savings.”
Even Kahn praised the plan. “I view this as a very positive development for shareholders of all the ICN family of stocks,” said Kahn, a former Beverly Hills stockbroker who launched his crusade for control of ICN last year, blaming Panic for wasting corporate funds on luxuries and paying himself millions of dollars a year while the company performed poorly.
The merger is intended to save money by streamlining management to eliminate duplication, reducing accounting and auditing fees and lowering income taxes. It would also reduce debt. ICN officials said Tuesday that much of the four companies’ long-term debt would be refinanced at lower interest rates.
Under the merger plan, which has not yet been filed with the Securities and Exchange Commission, ICN and Viratek stockholders would receive one share of the new company for about two of their current shares. SPI stockholders would receive one new share for each old share, and ICN Biomedicals’ investors would get one new share for five existing shares.
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Panic has been a controversial, high-profile figure. In 1991, he agreed to pay $600,000 to settle a civil complaint from the Food and Drug Administration, which said he improperly promoted the company’s drug Virazole to treat AIDS.
He left ICN in 1992 to become prime minister of Yugoslavia, saying he hoped to bring an end to that country’s civil war. He left nine months later after a no-confidence vote and returned to the company.
Analysts and brokers said they are encouraged that ICN’s management had started considering its investors.
“It’s the first time in my memory where management, after going through a brutal proxy battle . . . listened to what shareholders were saying and implemented plans and programs,” said Dave Harvey, a broker with Princor Financial Services Corp. in Odessa, Tex.
