Acting on reports of a major stock purchase and rumors of a takeover bid, speculators boosted the stock price of the Pennsylvania drug firm Rorer Group by $3.87 1/2 a share on Wednesday to close on the New York Stock Exchange at $43.75.
Rorer, whose pharmaceutical products include over-the-counter antacids and analgesics, has frequently been the subject of takeover speculation. On Wednesday, the rumored suitor was Costa Mesa-based ICN Pharmaceuticals. With more than 3.5 million shares traded, Rorer was the Big Board's third most active issue Wednesday.
Officials of both companies refused to comment on the takeover rumor--apparently triggered by the sale early Wednesday of a block of 1.96 million Rorer shares that had been held by Dow Chemical. The sale represents about 9% of Rorer's outstanding shares.
Most of the stock--more than 1.9 million shares--reportedly was purchased for $39.50 a share by Michael Steinhardt, a New York stock trader. Steinhardt's shares appreciated by more than $8 million during the day's trading.
Steinhardt refused to confirm the price that he paid for the Rorer shares and said he knew "nothing about ICN."
Dow said in a prepared statement that the sale was "part of the normal management" of its investments. Although analysts say they are unaware of any merger talks between Rorer and ICN, which has garnered much attention on Wall Street in recent weeks, Eugene Melnitchenko of the Dallas brokerage firm of Rauscher Pierce Refsnes said he "would not be surprised" by an ICN takeover bid. Melnitchenko's research reports tend to favor ICN.
In addition to having more than $250 million in cash, ICN soon is expected to take a third subsidiary public, providing additional leverage that it could use to pursue a cash and stock acquisition of Rorer--which has a market value of about $1 billion.
But David MacCallum, who follows Rorer for the San Francisco investment house of Hambrecht & Quist, said the $50 a share that ICN is rumored to have offered for Rorer is the top end of what it is capable of paying for the company.
"I think that's an awfully big bite for a company of ICN's size," he said.
For the year ended Dec. 31, 1985, Rorer posted net earnings of $36.8 million on revenue of $338 million. ICN, whose fiscal year ended Nov. 30, 1985, reported a net loss of $18.3 million on $62.8 million in revenue.
ICN has been in the spotlight in recent weeks, largely because of speculation over the potential use of its drug Virazole as a treatment for acquired immune deficiency syndrome, or AIDS.
In a recent interview, however, Milan Panic, ICN's chairman and founder, said he has "no proof that our drug is effective against AIDS in humans."