American Home Makes Tender Offer for Firm

MADISON, N.J. — American Home Products Corp. is bypassing the management of American Cyanamid Corp. and taking its buyout offer for the chemical and drug company directly to Cyanamid’s shareholders.

American Home Products, purveyor of such familiar names as Advil, Gulden’s mustard and Chef Boyardee foods, said Tuesday that its board had authorized a tender offer of $95 a share.

Cyanamid shareholders will decide on their own whether to accept the $8.5-billion buyout, no matter the position of Cyanamid’s managers.

The announcement came one week after American Home Products Chairman John Stafford made the same $95 offer in a letter to Cyanamid. The Cyanamid board acknowledged having received the offer but would not comment further. It remained silent Tuesday on the news of the tender offer.

A merger of the two New Jersey-based companies--American Home Products is in Madison and American Cyanamid is in Wayne--would follow several recent multibillion-dollar mergers in the drug-manufacturing industry.

Stafford said in a written statement Tuesday that despite the tender offer, the company remains confident that the American Cyanamid board will agree to merge. The offer is about 50% higher than Cyanamid’s stock price was before the release of Stafford’s letter last week. The stock jumped $30 to $93 on Aug. 2, the day of the offer.

Stafford said he is hopeful that Cyanamid board members “will recognize the inherent value of our offer to their stockholders, and we hope they will quickly accept our invitation to begin meaningful discussions for a negotiated transaction.”

Just in case they don’t, American Home Products also filed a lawsuit Tuesday in U.S. District Court in Maine challenging whether certain American Cyanamid anti-takeover and other defensive provisions ought to apply in this tender offer. Such defenses could make a hostile bid for Cyanamid excessively expensive.

Cyanamid shares climbed $2.625 to $93.625 on the New York Stock Exchange on Tuesday. American Home Products gained 25 cents to $56.25.