Drug distribution giant Bergen Brunswig Corp. sued Ivax Corp. on Friday, the morning after Bergen dropped its $1.6-billion plan to buy the Miami maker of generic drugs.
The suit, which alleges breach of contract, was filed in a New York federal court. It was sealed by a judge at the firm's request, a Bergen spokeswoman said.
Orange-based Bergen Brunswig said late Thursday that it was calling off the controversial planned acquisition, which Wall Street had pooh-poohed since it was announced four months ago. The company didn't explain its move. But analysts speculated Friday that Bergen got cold feet when other drug makers that compete with Ivax raised strong objections to the deal.
An Ivax spokesman said the company had not yet received the suit and could not comment. On Thursday night, Ivax issued a statement blaming Bergen for unilaterally terminating the deal "without good cause." The company didn't elaborate.
Bergen shares closed at $31.625 a share Friday, up 12.5 cents for the day. Ivax stock slipped $1.625 a share to close at $10.625.
The merger, which would have been the first between a large drug wholesaler and a big generic drug maker, triggered a sell-off in both companies' stocks when it was announced Nov. 11.
Bergen plunged $5.125 per share that day to close at $27.625 on the New York Stock Exchange, while Ivax stock tumbled $3.375 a share to $12.50 on the American Stock Exchange.
In recent weeks, however, Bergen shares had recovered, presumably on investors' beliefs that prolonged delays in negotiations suggested the deal was crumbling.
Analysts have criticized the deal for potentially alienating Bergen's pharmacy customers, who might wonder whether they would get the best deal through the merged company if it was distributing its own drugs.
In addition, drug makers who compete with Ivax and supply Bergen had strongly objected to the deal, said analyst Lawrence Marsh at Salomon Bros. in New York. That no doubt caused Bergen executives "to have second thoughts," he said.
Marsh had questioned too whether Ivax was the best acquisition candidate. He said Bergen executives had been anxious to see how Ivax's fourth-quarter earnings turned out and were disappointed.
Ivax lost $2 million on revenue of $320.7 million for the period, contrasted with earnings of $35.8 million on revenue of $361.8 million for the same period a year ago.