FTC Expected to Approve AmeriSource, Bergen Merger

AmeriSource Health Corp.’s purchase of drug wholesaler Bergen Brunswig Corp. will be cleared by the U.S. government even though it blocked 1998 plans to fold the industry’s top four companies into two, antitrust analysts predict.

The Federal Trade Commission has until Monday to decide whether to challenge the $3.9-billion acquisition, which would form the largest U.S. drug wholesaler. The FTC plans no meetings this week, and the five-member panel challenges mergers only if it votes to do so at a formal session.

Three years ago the FTC, then under Democratic control, successfully challenged No. 1 Cardinal Health Inc.’s proposed acquisition of Bergen Brunswig and No. 2 McKesson HBOC Inc.’s planned buyout of AmeriSource. At the time, the FTC said it would have challenged either takeover on its own.

The latest FTC review of a drug wholesaler merger probably will have a different result because “you still have three big guys left,” said Tom Burnett, president of the Merger Insight affiliate of Wall Street Access.

The combination of No. 3 Bergen Brunswig, based in Orange, and No. 4 AmeriSource, based in Valley Forge, Pa., would create a company that would be called AmeriSource-Bergen Corp.

AmeriSource spokesman Michael Kilpatric said the company expects to close the transaction by month’s end. He declined to comment on discussions with the FTC except to say “they are going along in a routine manner.”

AmeriSource expects to get word from the FTC after the 30-day waiting period expires at midnight Monday, he said. Both companies plan shareholder meetings Aug. 29 to seek approval of the takeover. Barring a last-minute request by FTC staff for more time to review the deal, the companies would be free to complete the transaction.

FTC spokeswoman Claudia Bourne-Farrell declined to comment.

Shares of AmeriSource, which have gained 33% since the takeover was announced March 19, rose $1.05 to close at $59.90 on the New York Stock Exchange. Bergen’s stock, which has climbed 38% during the same period, gained 54 cents to close at $21.85, also on the NYSE.

The change in political control of the FTC, from a 3-2 Democratic majority to a 3-2 Republican one, may spell the difference in how the agency treats the AmeriSource-Bergen combination, analysts say. Timothy J. Muris, an antitrust scholar who criticized the FTC’s decision to challenge the two drug wholesaler mergers in 1998, now is the chairman.

While Muris warned in an August 7 speech that companies shouldn’t expect lenient treatment of “problematic mergers” under his chairmanship, he has disagreed with several initiatives by his predecessor, Robert Pitofsky, including the 1998 drug case.