Merger Talks Boost Shares Of Drug Makers
Shares of U.S.-based drug makers rose as merger talks between SmithKline Beecham Plc and Glaxo Wellcome Plc raised the prospect of other acquisitions in the industry.
Schering-Plough Corp. rose 2-7/16 to 74-7/16, Pharmacia & Upjohn Inc. rose 11/16 to 39-1/4, Eli Lilly & Co. rose 1-3/4 to 69-3/8, Warner-Lambert Co. rose 5-7/16 to 155-15/16 and Amgen rose 4 to 54. Schering-Plough, Pharmacia & Upjohn and Warner-Lambert all touched 52-week highs earlier.
The Glaxo-SmithKline union would create the world’s largest drug company, with sales of more than $27 billion from drugs like Zantac ulcer treatment and Paxil antidepressant. That would pressure other drug makers to combine to better compete with their bulked-up rival. SmithKline said Friday it’s discussing a merger with Glaxo and ended talks with American Home Products Corp.
“The competitive tension caused by major companies such as American Home, SmithKline and Glaxo is so high that I expect a flurry of additional transactions,” said Samuel Isaly, managing partner of OrbiMed Advisors LLC, which oversees about $180 million of assets.
The speculation about mergers and acquisitions boosts an industry that already is benefiting from strong sales.
“U.S. drug sales are soaring and now you add some excitement about mergers - you couldn’t make up a better script,” said Christina Heuer, an analyst with Salomon Smith Barney.
Some of the stocks that moved substantially or traded heavily Monday:
NYSE
National Semiconductor, down 4-5/8 at 23-1/2.
The chip maker warned that it will post disappointing sales and income for its third quarter ending March 1. National Semiconductor said uncertainties in Asian-Pacific markets have hurt shipments.
Vencor, up 2-1/4 at 26-3/4.
The long-term health care provider announced plans to spin off a $2.5 billion real estate investment trust that will own Vencor’s properties. VenTrust, the new company, will eventually acquire properties to lease to other health care providers.
NASDAQ
Microsoft, up 5-11/16 at 154-7/8.
Chairman Bill Gates said the U.S. government’s antitrust case against the software giant won’t have a significant impact on Microsoft shareholders. Gates was speaking at a World Economic Forum meeting in Switzerland.
House of Fabrics, up 29/32 at 4-3/32.
Fabri-Centers of America agreed to acquire its smaller rival for $4.25 a share, or $100 million in cash and assumed debt. Fabri-Centers operates 907 craft stores in 48 states. House of Fabrics emerged from Chapter 11 bankruptcy protection in August 1996, and operates 262 stores in 27 states.