Syncor Calls Bid ‘Ridiculous;’ New Offers Unlikely

Syncor International Corp.’s rejection of a $77-million buyout bid last week apparently closed the door to a possible change of control at the Chatsworth firm in the near future.

In rejecting the $7.57-a-share offer from the Lisle, Ill.-based investment banking firm Van Kampen Merritt, Syncor said it was not for sale and denied Van Kampen Merritt’s claim that it had discussed the possibility of a sale with Syncor.

A spokesman for Van Kampen Merritt said the offer, which was made on friendly terms, expired Thursday. No further offers were anticipated, he said.

Van Kampen Merritt, a subsidiary of Xerox Financial Services, made the offer Sept. 1 on behalf of a client identified only as OSW Funding. The investment banking firm’s spokesman declined to say who owns OSW Funding.

Syncor operates a network of 84 high-tech pharmacy service centers that prepare and deliver radioactive pharmaceuticals and other specialty drugs to hospitals, medical clinics, doctors’ offices and homes.

Offer ‘Ridiculous’

Syncor President and Chief Executive Officer Gene R. McGrevin said the fact that Van Kampen Merritt wouldn’t say who was behind the offer and that OSW Funding let the offer expire so quickly was “ridiculous.”

“It wasn’t a real offer,” McGrevin said.

McGrevin also said Van Kampen Merritt acted with “gross misrepresentation” by stating that it had held merger talks with Syncor. Monty Fu, chairman of Syncor, had previously discussed with Van Kampen Merritt the possibility of selling part of his 7.5% stake in the company, but discussions concerning a possible sale of the firm never took place, McGrevin said.

In the fiscal year that ended May 31, Syncor earned $433,000, down 89% from $4 million in net income in fiscal 1988. Revenue rose 9% to $113.9 million from $104.7 million. Its stock currently trades at about $6 a share.

Analysts have criticized Syncor because its financial performance has failed to live up to expectations, but last January’s appointment of McGrevin, a health-care industry veteran, as president and chief executive officer was seen as a positive move.

“I think that anybody who has studied the company has seen that with new management in place the company is in the midst of an earnings turnaround,” said Steven B. Gerber, an analyst at Bateman Eichler, Hill Richards.

Syncor provides special radioactive pharmaceuticals that detect and treat a variety of illnesses and require special handling because they typically have shelf lives of just a few hours. Based on the accelerating growth of the so-called “nuclear imaging industry,” which will probably produce increasing numbers of products that require the special handling Syncor provides, prospects for the company are quite good, Gerber said.

Gerber predicted Syncor would earn $2.1 million in the current fiscal year.

Gerber also said ICN Pharmaceuticals, a Costa Mesa firm that owns about 8% of Syncor’s stock, has contemplated a buyout bid for Syncor. ICN would not comment.

But based on growth prospects for Syncor, Gerber doubted that large shareholders would consider an offer below $9 a share.

Syncor’s largest shareholder is Compagnie Oris Industrie, a French group that owns about 15% of Syncor’s stock.