Rorer Group Inc. yesterday made its expected move to defeat two rivals in the race for control of A.H. Robins Co. and become the nation's sixth-largest pharmaceutical manufacturer.
Robins spokesman Roscoe E. Puckett Jr. said in Richmond that Rorer improved an earlier offer by proposing to pay $2.275 billion into two trusts related to the Dalkon Shield, the defective Robins intrauterine contraceptive device. By far the larger trust would be for women injured by the IUD.
In addition, Aetna Life & Casualty Co. "would, subject to certain unspecified conditions, provide $200 million in excess insurance coverage," Puckett said. Aetna was the IUD's product-liability carrier and is itself a target of victims' claims.
A Rorer spokesman in Ft. Washington, Pa., declined to comment on the conditions or on any other aspect of the development.
Puckett said the directors of the family-controlled Robins firm are "considering this new proposal along with the other proposals now pending."
The new Rorer offers totals $2.475 billion -- the sum said by U.S. District Judge Robert R. Merhige Jr. to be needed for "full" compensation of Dalkon Shield victims. He is presiding over the Chapter 11 proceeding.
In addition to Rorer, American Home Products Corp. and Sanofi, a major French pharmaceutical house, each has proposed to put $2.475 billion in trust for Dalkon Shield-related claims. American Home, like Rorer, seeks to acquire Robins, while Sanofi seeks a 60 percent controlling interest.
The judge has set a Jan. 6 deadline for Robins to choose among its suitors and amend its pending financial reorganization plan to incorporate the $2.475 billion.
The new Rorer bid would exchange its common stock for Robins', at a rate of 550 Rorer shares for 1,000 shares of Robins.
The Rorer proposal, contained in a letter from Chairman Robert E. Cawthorn, contains at least one provision likely to generate controversy. The provision concerns the so-called termination or "breakup" fee that Robins would pay Rorer to compensate for its legal and financial expenses if its proposed acquisition of Robins fails.
Under the old reorganization plan, the minimum fee would be $25 million and the maximum $75 million. The Dalkon Shield Claimants' Committee has criticized those sums as unexplained and also unjustified, particularly because of the priority the Bankruptcy Code assigns to creditors.
The claimants are the principal creditors in Robins 29-month-old voluntary bankruptcy.
Under the new offer, Puckett said, the fee "would be increased to $100 million plus out-of-pocket expenses, irrespective of when the bid that triggers the payment of that fee is made." The $100 million is $25.6 million less than Rorer's net income in 1986, and $63.2 million more than its net income in 1985. A hearing on the question of an appropriate fee is set for Wednesday.
Another controversial provision in the new Rorer proposal would bar Robins from accepting a competing offer that doesn't exceed by at least 10 percent the aggregate of the sums Rorer now proposes to provide for all claimants and creditors plus the value of the consideration payable to Robins stockholders.
Merhige has said he would allow an undefined "reasonable" period for payment of the $2.475 billion by a reorganized Robins company.
Rorer and American Home define "reasonable" to mean "not to exceed seven years," Puckett said. But the claimants' committee, pointing out that Robins sold its last Dalkon Shield in the mid-1970s, has called a seven-year period ending in 1995 too distant and unfair.
Murray Drabkin, counsel for the claimants' committee, yesterday termed the new Rorer bid "a nonstarter."
Sanofi has not specified the duration of its proposed payment period.
Under Robins' pending reorganization plan, Rorer would, "over a period of seven years," pay up to $1.765 billion into the trust for victims, including an initial Robins payment of $450 million. The other trust would get $250 million over four years to pay Dalkon Shield-related claims, including those to indemnify officers and directors of Robins.
The cap on Rorer's liability in the old proposal aggregated $2.015 billion -- $260 million under the new offer, excluding Aetna's $200 million in insurance coverage.