Omnicare’s top management decided private negotiations with their counterparts at takeover target PharMerica were not working. So on Tuesday, Omnicare went public with an announced $15 per share bid for the company. The proposed deal would involve the No. 1 institutional pharmacy provider purchasing the No. 2 for $715 million, according to an Omnicare announcement.
PharMerica CEO Gregory S. Weishar threw cold water on what he called a “highly conditional and risky proposal that undervalues PharMerica and its future prospects.”
“Omnicare has been unwilling to assume the considerable risk with respect to its ability to close a transaction in a timely manner,” Weishar said, adding that antitrust clearance could be difficult to achieve.
“We are surprised that PharMerica has declined our repeated efforts to engage in negotiations, particularly as it was PharMerica who first approached us regarding a transaction,” Omnicare CEO John Figueroa said in a statement early Tuesday. He expressed hope that “meaningful” negotiations could still take place but threatened to take the purchase offer directly to PharMerica stockholders, who could help compel a sale, if necessary.
Omnicare’s bid of $15 per share represented a 37.2% premium over PharMerica’s Monday’s closing price ($10.93), and a 25.9% premium over the average closing price for the previous month. In trading Tuesday, PharMerica share prices zoomed to nearly 15 but hovered around 14 for much of the session, closing at $13.89 on Tuesday.
Omnicare, a Fortune 400 company, is by far the largest institutional pharmacy provider in the long-term care sector. In response to concerns about possible Federal Trade Commission scrutiny, an Omnicare spokesman said “neighborhood” pharmacies are the company’s biggest competitive rival.