Pounds 6.3bn deal leaves SmithKline at altar

NEW YORK - American Cyanamid, the US drugs group that planned to swap assets with SmithKline Beecham last month, has agreed instead to merge with American Home Products in a deal worth dollars 9.7bn ( pounds 6.3bn), writes Larry Black.

The dollars 101-a-share agreement came a day after Cyanamid let a one-day offer of dollars 100 a share from American Home expire.

But executives said the unusual take-it-or-leave-it offer, worth dollars 5 a share more than its previous hostile tender price, had pushed Cyanamid to reopen talks.

Cyanamid had tried to find a 'white knight' to help it ward off advances by American Home, a consumer products conglomerate, and said on Tuesday it had received two expressions of interest. But it also invited American Home to improve its offer before a planned meeting of directors on Tuesday, expected to approve the swap of assets with SmithKline.

The exchange would have seen SmithKline receive prescription drug and consumer- brand businesses in return for transferring its vaccine and animal health businesses to Cyanamid.

SmithKline recently acquired Diversified Pharmaceutical Services, a pharmacy benefit manager, for dollars 2.3bn, and is looking for additional drug products to channel through its expanded distribution network.

American Home is about twice the size of Cyanamid and the combined group will have annual revenues of more than dollars 12.5bn, with products ranging from drugs to healthcare products, food, vaccines and chemicals.

American Home Products makes over-the-counter drugs such as Advil and Anacin, as well as Chap Stick and tinned pastas.

Cyanamid is strong in vaccines and drugs, and also has a presence in agricultural products such as pesticides.