Roche to pay dollars 5.3bn for Syntex

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The Independent Online
NEW YORK - Roche Holding, the big Swiss pharmaceuticals group that has been shopping for a US partner, stunned the industry yesterday by buying a struggling US drug-maker and paying a huge premium for it, writes Larry Black.

Syntex Corp - whose two core anti-inflammatory drugs, Naprosyn and Anaprox, recently lost patent protection - agreed to an all-cash merger worth dollars 5.3bn. That figure values the deal at dollars 24 a share, almost 60 percent more than its opening share price yesterday would have suggested.

Syntex closed up dollars 8 1/2 at dollars 23 3/4 , and sent shares of other distressed US drug companies soaring. Soon after the closing, Eastman Kodak scheduled an important announcement for today that some analysts said could involve a plan to sell or spin off its Sterling Drugs division.

Kodak's share jumped more than 7 per cent on the speculation, while some pharmaceutical issues - notably Upjohn - gained almost as much on merger rumours.

Roche, which first expressed interest in Syntex more than five years ago after losing in a dollars 4.6bn bidding war for Sterling, said the price it was paying for the California company was 'fair', based on an independent investment banking opinion. But industry experts said they were puzzled by the large premium - five times book value.