Fisons gives in to RPR

MAGNUS GRIMOND

The drugs group Fisons has given in to the pounds 1.8bn raised bid from Rhone- Poulenc Rorer after the collapse of discussions with an unnamed white knight. The board, led by chief executive Stuart Wallis, yesterday recommended the 265p offer, raised from 240p last week, nine days ahead of the closing date on 20 October.

The news came as a surprise as Mr Wallis has strenuously resisted the bid and only last week dismissed the higher offer, saying it continued to undervalue the company. Explaining his apparent volte face, he said yesterday the board had already concluded before receiving the increased offer that it was in a range they would be prepared to accept. "We would have even been prepared to accept a little lower than that", he said.

What had prevented them was an approach from a major pharmaceutical company, which had led them to believe that more attractive proposals might be put before shareholders. Mr Wallis refused to reveal the identity of the putative white knight, although there were rumours that it was a Continental rival of RPR. There was some surprise that the board had decided to recommend the bid without waiting for the closing date to see if another bidder would enter the fray.

Mr Wallis dismissed any suggestion that there had been pressure from institutional shareholders, who he said had been "very loyal and supportive". However, many have defected from his cause during the last few weeks, with yesterday's sale by Sun Life of Canada building on a market raid last week to take the bidder's holding to 20.9 per cent.

Robert Cawthorn, chairman of RPR, was yesterday delighted at Fisons' acceptance of the revised offer, which followed all-night negotiations between the two sides. "We are very pleased that this was a very good price for Fisons, which has been recognised by the board."

Mr Cawthorn said the next step, once the bid went unconditional, would be to seek further information on Fisons and set up a small integration team involving both sides to see how to proceed with the merger of the businesses. There would be redundancies, with one area of obvious overlap being the two companies' respiratory sales forces in the US. But job losses from the combined team of around 750 would be less than the 400 suggested in some quarters.

Meanwhile, Fisons' development base for inhalant devices in Loughborough, Leicestershire, is likely to be expanded. The site is held on a lease from Astra of Sweden for five years. It was too early to say whether the 200 staff there would be merged with RPR's UK research and development operation at Dagenham, Mr Cawthorne said.

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