A French drug company yesterday ended its quest for control of A.H. Robins Co., saying it would not try to top the bid made by American Home Products Corp. less than 24 hours earlier.
The successful bid by American Home -- a New York-based conglomerate and the third-largest pharmaceutical manufacturer in the United States -- "was structured completely differently from ours and was based on different objectives," said Jean-Francois Dehecq, vice chairman and chief operating officer of Sanofi S.A. of Paris.
"Under these conditions, and considering the very high amounts offered by American Home Products, it is not reasonable for us to change our proposal and compete with this type of offer," he said.
American Home's $3.275 billion bid won the support of the key parties in Robins' 2 1/2-year effort to achieve a bankruptcy reorganization plan. The largest element of the bid was $2.375 billion in cash -- or $2.475 billion paid over a year -- for the tens of thousands of women injured by the Dalkon Shield, the defective contraceptive device sold by Richmond-based Robins in the early 1970s.
In a related development yesterday, Aetna Life & Casualty Co., which was Robins' product-liability insurer for the intrauterine device, agreed to insure potential shortfalls in the trust fund to be set up by American Home. In addition, persons close to the case laid out a best-case scenario under which claimants would be compensated within a few months after Robins emerges from bankruptcy proceedings. The timetable would be as follows: Negotiations, which will start today between representatives of Robins and of the Dalkon Shield Claimants' Committee, lead to agreement on a reorganization plan that's also acceptable to American Home, and on a disclosure statement explaining it in plain language.
This would assure smooth sailing in court. "I'll work very hard to achieve that," said claimants' committee lawyer Murray Drabkin.
(Each of four previous plans had provisions that were unacceptable to the committee, such as indemnification of Robins' officers for IUD-related liability.)
A plan and a disclosure statement are filed on Feb. 1 (the date set by U.S. District Court Judge Robert R. Merhige Jr. for filing of the plan). At a court hearing, no more than 25 days later, all agree the statement is adequate.
The statement and a ballot on the plan are sent to creditors -- mainly shield claimants. The claimants committee advises them to vote for the plan, and they do so.
Merhige holds a hearing, finds full compliance with the Bankruptcy Code and orders confirmation of the plan. No one appeals.
Early May: The plan takes effect with a final order by the judge, and American Home writes a check to the claimants' trust.
After that, a claims resolution facility will take over. Under arrangements to be specified in the plan, its trustees will determine how many women (from a pool of nearly 200,000) will be eligible for how much money. Procedures for handling disputes will be created.
As noted, the foregoing assumes that there are no problems that could cause long delays.
Meanwhile, Rorer Group Inc., the first suitor to be embraced and jilted by Robins, is taking depositions from Robins' officials and counsel to find out if they violated a pact to do everything possible to protect Rorer's merger agreement. Before dropping Rorer in favor of Sanofi, Robins had won the approval of Merhige for a reorganization plan embodying an offer by the Fort Washington, Pa., drug firm. Rorer said it isn't planning to enrich its offer, but isn't withdrawing it either. "Robins has switched partners before, and the dance might not be over," a spokeswoman told Dow Jones News Service.
Even if its rejection stands, Merhige has pledged that Rorer will be paid "break-up fees" of $25 million -- a sum about equal to its 1987 net income -- plus millions in expenses.