American Home Ups Offer And Gets Cyanamid

American Cyanamid has succumbed to the hostile advances of American Home Products, which launched a $95/share bid for the company earlier this month, but with a higher price tag of $101/share. AHP first improved its offer to $100/share on August 15 on condition that the Cyanamid board - which had urged shareholders not to take the $95/share offer - accepted the transaction by close of trading the following day.

However, it took another dollar and two more days of intense discussions to reach final agreement on August 17. The tender offer expires midnight September 14 unless extended. The general view has been that Cyanamid was hoping for a "white knight" to rescue it from AHP's unsolicited bid, and had also been rumored to be involved in discussions with SmithKline Beecham for a possible swap of assets (Marketletters August 8 and 15).

The lack of a suitor could stem from the fact that $9.7 billion - which is what AHP will now be paying for Cyanamid - is rather steep for a company that does not have a great deal to offer in terms of future products. And 20 times expected 1995 earnings and a 60% premium on Cyanamid's last share trading price before the bid is high. This is also the largest bid in the pharmaceutical sector for several years, topping recent acquisitions such as the Merck/Medco deal at $6.6 billion, the pending Roche/Syntex purchase at $5.3 billion, Eli Lilly's $4 billion for PCS Ltd, SB's $2.3 billion for Diversified Pharmaceutical, and Sanofi's $1 billion deal for Sterling Winthrop's human drug business.