NEW YORK — Covington-based Omnicare Inc. on Tuesday went public with a $457 million offer for Louisville-based pharmacy management services company PharMerica Corp., sending shares of both companies surging.
Omnicare dispenses drugs for nursing homes and other long-term care centers. Omnicare CEO John Figueroa wrote in a letter sent Tuesday to the PharMerica board that its CEO, Gregory Weishar, approached him about exploring a combination of the companies back in April, and Figueroa expressed interest to Weishar several times. PharMerica's CEO was not named in the letter.
Figueroa wrote that PharMerica then refused to start negotiations. Omnicare's all-cash bid values PharMerica at $15 per share, a premium of 37 percent based on Monday's closing price of PharMerica shares. PharMerica has traded between $6.88 and $14.80 over the past year. Counting PharMerica's debt, Omnicare values the deal at about $716 million.
PharMerica shares (NYSE: PMC) closed Tuesday at $13.89, up $2.96, or 27 percent. Omnicare shares (NYSE: OCR) closed Tuesday at $29.85, up $2.95, or 11 percent.
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Figueroa said a combination of the companies would save money and broaden services, among other benefits. The CEO also said in the letter that Omnicare's "strong preference" is to negotiate a mutually acceptable deal with PharMerica. The company's proposal is not subject to financing contingencies.
"However, if you continue to refuse to engage in meaningful negotiations, we are prepared to submit our proposal directly to your stockholders," he wrote.
Credit Suisse analyst Glen Santangelo said he expects either an increased bid from Omnicare, or an offer from a private equity firm that is interested in PharMerica.
PharMerica operates 94 pharmacies in 44 states, serving nursing centers, hospitals and other long-term care providers. It was formed by the July 2007 spin-off and combination of the institutional pharmacy businesses of AmerisourceBergen Corp. and Kindred Healthcare Inc. into a stand-alone company.
Both companies stand to benefit as blockbuster drugs like Lipitor, Plavix and others lose patent protection over the next few years. That will allow cheaper generic versions to enter the market, and it means bigger profit margins for Omnicare and PharMerica.
PharMerica accused Omnicare of "self-serving tactics" in taking the offer public. The company said it has rejected Omnicare's offers because they undervalue the company and are not in the best interest of PharMerica's shareholders. PharMerica added that it is open to discussing a transaction but that a deal with Omnicare could be disruptive to its customers and employees, and Omnicare is not willing to assume the risks involved in completing the proposed deal.