ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, November 12, 1996 TAG: 9611120101
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: MIAMI
SOURCE: Associated Press
STOCK PRICES DROPPED for Bergen Brunswig Corp. as well as Ivax Corp. because of Ivax's poor showings.
A $1.65 billion merger announcement by drug wholesaler Bergen Brunswig Corp. and generic drug giant Ivax Corp. sent both stocks tumbling Monday because of Ivax's recent weakness in a cutthroat business.
Executives touted the new company as a combination of Bergen Brunswig's nationwide distribution network with Ivax's drug portfolio and manufacturing.
``We can cut costs in the supply chain and help make health care more affordable,'' said Donald Roden, the Bergen Brunswig president who will be chief executive of the new company.
But Bergen Brunswig, one of the nation's biggest drug wholesalers, ``is a very solid, steady, almost boring type of stock, and Ivax has been wild and woolly,'' said Robert Wasserman, an analyst with Southeast Research Partners.
The deal came on the same day that Ivax reported losing $179 million, or $1.47 a share, in the third quarter, because of stiff price competition, declining sales, write-offs and the costs of a reorganization. Revenues fell 28 percent to $223 million. In the same quarter last year, Ivax earned a profit of $27.6 million, or 23 cents a share, on $310 million in revenues.
The loss included write-offs of $104 million in assets and inventories and expenses of $14 million for restructuring, factory shutdowns and other consolidation measures.
Acknowledging Ivax's troubles, the deal values the company at just $13.75 a share, or more than $2 below its closing price Friday of $15.87 1/2.
In Monday's trading, Ivax fell $3.37 1/2 to $12.50 on the American Stock Exchange, while Bergen Brunswig was off $5.12 1/2 to $27.62 1/2 on the New York Stock Exchange. If that price holds, the value of the deal would drop to about $1.45 billion.
LENGTH: Short : 43 linesby CNB