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New war of words in drugs bid battle

AAH, the UK drugs distributor fending off a hostile £377m takeover bid from Gehe, the German pharmaceuticals maker, dismissed the offer as inadequate and opportunistic.

"Gehe is trying to get your assets on the cheap," AAH warned shareholders yesterday in its defence document.

In response, Gehe poured scorn on the AAH defence saying it contained little more than vague and unquantified promises for the future.

Gehe launched its 420p a share bid for the company late last month when the company's share price was weak following a period of poor performance and a profits warning.

In its formal defence document AAH announced a pre-tax profits forecast of £29m for the year to March, compared with £42m previously. The principal healthcare business is forecast to make operating profits of £37.8m, up from £36m. However the environmental services business, which earned £3.9m in 1993-94, is expected to lose £3m this year.

AAH said that Gehe's offer was inadequate for a company that has built up a 30 per cent share of the UK pharmaceuticals market and was already undergoing a major rationalisation. "The hard work has already been done" a spokesman said. Problems stemmed from non-core activities such as waste disposal which were being sold. "Gehe's offer completely ignores the fact that AAH's principal healthcare businesses continue to perform well and will benefit further from the current rationalisation and cost cutting programmes."

AAH is due to begin visits to shareholders this week, with the view of Philips and Drew Fund Managers - which owns 17 per cent of the shares - considered crucial.. The shares finished unchanged at 432p, 12p above the bid price.