Standing on principle or waiting for a better deal?

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James M. Berklan, Editor
James M. Berklan, Editor
So this is what it comes to when No. 1 attempts to buy No. 2. This could be some lively theater by the time the final curtain drops.

In case you hadn't heard, Omnicare, THE biggest pharmacy services company in long-term care facilities today, put out notice that it wants to buy the nation's second-biggest such company.

It seems that firm, PharMerica, doesn't want to be bought. Well, maybe. Actually, all signs are that the PharMerica does want to be bought. Maybe just not by Omnicare. Or for the offered payout.

Speculation in trading circles put the No. 2 looking for a suitable buyer back to at least this spring. Various closed-door meetings among bankers and other investor types actually led the Securities and Exchange Commission to inquire as to what the heck was influencing the company's valuations. Many knew something had to be brewing.

Then, it comes out that PharMerica had in fact actually approached Omnicare about possibly making the purchase — according to Omnicare CEO John Figueroa. The Big O twice made bids in private, but it did not get the answer it wanted either time. So that compelled Omnicare to blare that it was trying to buy PharMerica for $15 per share, or more than $700 million overall.

The stalked quickly announced the purchase offer wasn't in stockholders' best interest. PharMerica's financial and legal advisors — note the order — were “unanimous” in their disapproval.

More than a few people have noticed the air of deja vu to the way Omnicare pursued, and ultimately swallowed, NeighborCare six years ago in a deal worth about $2 billion.

Peeling back the rest of the PharMerica statement tells insecurity about a host of issues: regulatory, lack of clarity on how to get past antitrust issues, potentially lengthy court proceedings, high risk. And — bam! — no “assurances of Omnicare's ability to complete a transaction on a timely basis or at all.”

PharMerica CEO Gregory S. Weishars added that he is duly open to “all opportunities to maximize value.” If only Omnicare would be willing to assume “the considerable risk with respect to its ability to close a transaction in a timely manner.”

Even though PharMerica then quickly acted to put a “poison pill” defense in place, those words — directed at a would-be buyer holding nothing but bags full of cash — swirled inward toward only one sentiment: Show us the money — a lot more money.
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