Drug wholesaler Cardinal Health Inc. said it will buy R.P. Scherer Corp. for $2.4 billion in stock and assumed debt, getting the pharmaceuticals wholesaler into the business of making faster-acting versions of drugs.
The move pushes Cardinal's planned $4-billion takeover of Orange-based rival Bergen Brunswig Corp. further into the background after a legal challenge by the Federal Trade Commission in March.
Dublin, Ohio-based Cardinal Health has been expanding in recent years, looking to add more profitable lines to its business of supplying drugs to pharmacies and hospitals. Scherer works with drug makers to find faster or easier ways of treatment, such as a project with Pfizer Inc. to develop a wafer version of its new impotence drug, Viagra, that will dissolve more quickly than the current pill.
Scherer makes several thousand products in soft-gel capsules, including drugs, vitamins and cosmetics.
Under the agreement, each Scherer share will be swapped for 0.95 Cardinal Health share, valued at $90.96 on Cardinal's close Friday of $95.75. The offer is a 17% premium to Scherer's Friday close of $77.44. Cardinal Health said it will also assume $159 million in long-term debt.
The FTC has challenged the Cardinal-Bergen Brunswig transaction as well as McKesson Corp.'s planned $3.13-billion purchase of AmeriSource Health Corp. on antitrust grounds as the top four U.S. drug wholesalers plan to combine into just two companies. The FTC challenge is set for trial in June.
Cardinal Health's shares dropped $5.75 to close Monday at $90 on the New York Stock Exchange. Shares in Scherer jumped $6.56 to close at $84, also on the NYSE.