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Bergen Brunswig to Take 'Goodwill' Charge of $87 Million


Bergen Brunswig Corp. said Wednesday that it will take a one-time charge of about $100 million in its fiscal fourth quarter, mostly for the write-down of a business it won in a bitter takeover battle six years ago.

The Orange-based drug distribution giant is writing off $87 million of "goodwill" associated with its purchase of the former Durr-Fillauer Medical Inc. of Montgomery, Ala. Bergen snatched the Alabama firm in 1992 by outbidding its industry rival--now called Cardinal Health--with a $470-million offer.

"You could argue now, six years later, that they must have overpaid by $87 million," said Richard R. Vietor, an analyst with Merrill Lynch & Co.

He considers the write-off one of several steps by Bergen management to wring better results from the company's medical supplies business--one that is dwarfed by its basic drug distribution operations.

In an interview Wednesday, Bergen Chief Executive Donald R. Roden said, "The growth rate of the medical company was not as high as it had been in years past."

Among other steps, Bergen said it will lay off 55 lower-level salespeople in the medical unit and close four distribution centers. Employees and operations in Southern California won't be affected.

Roden said Bergen may seek to expand its medical supplies business through acquisitions or alliances with other companies. He said the company plans to hire high-level marketers who can make pitches to hospital-system executives, while stepping up computerized servicing of customer accounts.

Christopher McFadden, a Wheat First Union analyst, said that recent consolidations in the health-care industry have left purchasing decisions in the hands of high-level hospital executives.

For Bergen to grow, it will need marketers who can act as consultants to hospitals, offering suggestions on how they might "re-engineer" and boost "economies of scale" in procurement and other areas.

In New York Stock Exchange trading Wednesday, Bergen shares dropped $4.19, to $46.44. Analysts said that company officials had hinted weeks ago that it might take a charge.

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