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Bergen Brunswig Acts to Prevent Takeover : Investors: Company bylaws now make it harder for hostile outsiders to influence shareholder meetings.

March 08, 1995|From Bloomberg Business News

ORANGE — Bergen Brunswig Corp., responding to rumors that it may be a takeover target, said it has rewritten its corporate bylaws to offer greater protection against a hostile suitor.

The directors of Bergen Brunswig, a drug distributor based in Orange, approved six changes to the bylaws Friday, according to a filing with the Securities and Exchange Commission.

One of the changes bars any outside party from calling a special shareholders meeting, a possible avenue for proposing a hostile offer for the company.

Another measure requires outsiders to give the company notice before nominating directors or issuing proposals at the company's annual meeting.

"This was in response to takeover rumors," Lisa Riordan, director of investor relations at Bergen Brunswig, said Tuesday. "We felt it was a prudent thing to do in the shareholders' best interests."

Cardinal Health Inc. of Dublin, Ohio, has been cited as a possible bidder for Bergen Brunswig, which is the nation's largest distributor of drugs to hospitals and has about $7.5 billion in annual sales.

Cardinal Health, with $5.8 billion in annual sales, ranks as the nation's second-largest distributor to hospitals, said Daniel Lewis, a health-care industry analyst with the brokerage Fahnestock & Co. in New York.

Neither Bergen Brunswig nor Cardinal Health has confirmed rumors of a merger.

However, a combination of the two companies would benefit both, Lewis said, because they have similar customer mixes and operate warehouses in compatible geographic locations.

What's more, Bergen Brunswig's profit margins would benefit from Cardinal's ability to find and purchase discounted drugs, Lewis said.

"Manufacturers offer one-time availability discounts, and Cardinal has been very proficient at snatching up these discounts," he said.

At the same time, Cardinal Health has a history of making friendly acquisitions rather than hostile tender offers, Lewis said.

The bylaw changes would delay any investor who wanted to wage a proxy fight by giving the board a chance to respond, said Michael Goldman, a lawyer at Potter, Anderson & Corroon in Wilmington, Del.

"They don't want to wake up one day and find out they are involved in a proxy fight."

Bergen Brunswig in February, 1994, had already established a shareholder-rights plan that makes a hostile offer prohibitively expensive.

Through a subsidiary, Bergen Brunswig distributes drugs, cosmetics, toiletries and home health-care supplies from 33 locations in 22 states.

In addition to hospitals, its customers are health maintenance organizations, pharmacy chains and supermarkets.

Another subsidiary, Durr Medical Corp., distributes medical and surgical products.

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