American Home Bids $8.5 Bill For Cyanamid

Merger mania in the pharmaceutical sector moved on another pace last week, with an unsolicited $8.5 billion offer from American Home Products for American Cyanamid. The offer price of $95 per share is around 50% higher than Cyanamid's closing price on August 1, AHP chairman and chief executive John Stafford pointed out in his letter to Cyanamid's chairman and chief executive Albert Costello. It is the biggest takeover deal in five years, when SmithKline and Beecham and Bristol-Myers and Squibb announced their mergers.

However, there could be a fight coming up, as SmithKline Beecham has also been rumored to be seeking an exchange of assets with Cyanamid, which could result in Cyanamid (which operates in the drug sector mainly under the Lederle name) moving out of the drugs sector altogether.

In his letter, Mr Stafford referred to these recent press reports, and warned that "since any such transaction would affect our willingness to proceed with this proposed transaction, we urge you not to enter into or to agree to any significant transactions, or take any additional defensive measures or other actions, that would adversely affect the ability of your stockholders to receive the benefits of our proposed transaction."