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Costs Heavy if Bergen Merger Is Aborted

SEC filing: Document on deal with AmeriSource details such penalties as a $75-million breakup fee.

March 21, 2001|From Dow Jones Newswires

The merger of rival drug distributors Bergen Brunswig Corp. and AmeriSource Health Corp. carries a $75-million breakup fee, according to a document filed Tuesday with the Securities and Exchange Commission.

The SEC filing follows Monday's disclosure that the two companies would combine in a $2.3-billion stock swap that they have called a merger of equals. The new company, AmeriSource-Bergen Corp., would be based at AmeriSource headquarters in Valley Forge, Pa.

The transaction, which also calls on AmeriSource to assume $1.3 billion in Bergen debt, is expected to close this summer.

Bergen, based in Orange, would be liable for the $75-million fee--and up to $15 million in AmeriSource expenses--if the deal is terminated because Bergen's board withdraws or modifies its recommendation of the AmeriSource merger in the event that any third party seeks to acquire Bergen.

Bergen would also be liable for the fee and expenses if the deal is terminated because its shareholders don't approve it after any third-party acquisition proposal or if shareholders approve a merger with another company within nine months of a Sept. 15 closing deadline.

AmeriSource would be expected to pay the same fee and expenses to Bergen under similar circumstances, according to the SEC filing.

If the agreement is terminated because either company breaches the warranties of the merger pact and doesn't fix the problem within 30 days, that company would be liable for up to $10 million of its merger partner's expenses.

Either party may terminate the deal if it is not completed by Sept. 15, provided the deal hasn't been delayed by either company's failure to meet its financial and other obligations required under the merger agreement.

The deal is subject to the approval of both companies' shareholders and U.S. antitrust authorities and the confirmation of new purchase accounting rules to be issued by the Financial Accounting Standards Board.

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