RICHMOND, JAN. 1 -- After 11 1/2 hours of discussion over two days, A.H. Robins Co.'s board of directors announced today the selection of the French pharmaceutical giant Sanofi from among three potential merger partners.
The six-member board met for 5 1/2 hours on New Year's Eve and for six hours today to discuss merger offers from Sanofi, Rorer Group Inc. of Fort Washington, Pa., and New York-based American Home Products Corp.
E. Clairborne Robins Jr., president and chief executive officer of the troubled Robins, said in a prepared statement that the board felt the Sanofi proposal best serves the interest of Dalkon Shield claimants, other Robins creditors and the Richmond company's stockholders.
"I can't provide any elaboration" on why Sanofi was picked from the three suitors, Robins spokesman Roscoe E. Puckett Jr. said. Puckett also refused to place a dollar value on the offer by the Paris-based Sanofi, France's second-largest drug firm.
Robins has until Jan. 6 to submit a new bankruptcy reorganization plan to U.S. District Judge Robert R. Merhige Jr. in Richmond. The Sanofi proposal will be incorporated in the amended plan, Puckett said.
Robins filed for protection from its creditors under Chapter 11 of the Federal Bankruptcy Code in August 1985 in the face of injury claims from users of its Dalkon Shield intrauterine birth-control device.
Puckett said Sanofi plans to acquire a controlling interest in Robins and provide funding of $2.475 billion to satisfy Dalkon Shield claims and expenses in Robins' bankruptcy case.
Sanofi proposed establishing a trust to administer and settle Dalkon claims, Puckett said. The trust would be funded with an initial cash payment by Robins of $100 million and a letter of credit for $2.375 billion, he said.
The trustees would be permitted to draw against the letter of credit with the limitation that not more than 50 percent may be drawn during the first two years following consummation of the reorganization play, and not more than 80 percent during the first four years, Puckett said.
According to Puckett, Sanofi would acquire a controlling interest in Robins by using an American subsidiary, CEVA Laboratories Inc., as the merger vehicle. CEVA, a Delaware corporation, is in the animal health and veterinary drug business.
Puckett said Robins would be merged into CEVA, which, upon consummation of the merger, would change its name to A.H. Robins Co. Inc. As a result of the merger, Robins stockholders would receive 83 percent of the then issued and outstanding stock of the so-called new A.H. Robins, with 17 percent being retained by Sanofi.
Sanofi's directors will vote on the plan Jan. 5, Puckett said. The proposal also is conditioned on final confirmation of Robins' reorganization plan and on approval by Robins stockholders and the necessary government agencies.
Rorer, with whom Robins once had an agreement to merge, last week sweetened its offer to around $2.92 billion. The bid included a $2.28 billion trust fund for Dalkon Shield claimants, an insurance contribution of $200 million from Aetna Casualty & Surety Co. and a stock swap valued at about $440 million.
Last summer, Rorer proposed to buy Robins for about $2.63 billion, including $1.75 billion to cover potential claims.
But that was before Merhige said the reorganization must provide for a $2.475 billion trust fund to satisfy potential claims.
American Home, which abandoned an earlier bid for Robins in February, re-entered the bidding on Dec. 23.
The consumer products manufacturer said that in exchange for all 24.2 million outstanding Robins' shares, it would put up $550 million worth of American Home stock and pay the Dalkon claims over a seven-year period.
Puckett said he could not comment on whether any bids were changed before final proposals were submitted late Wednesday.
In closing trading on the New York Stock Exchange Thursday, Robins closed up 12.5 cents to $20.50, Rorer fell 25 cents to $36 and American Home Products rose $1 to $72.75.
Robins first began marketing the Dalkon Shield in January 1971. Sales in the United States were suspended in June 1974 after four deaths and 36 septic abortions among wearers were reported.
Other Robins products include Robitussin cough medicine and Chap Stick lip balm.