A.H. Robins Co.'s acceptance of a merger offer from Sanofi S.A., a French drug company, drew a hostile reaction yesterday from the committee representing victims of the Dalkon Shield intrauterine contraceptive device and a wait-and-see comment from the committee representing the outside stockholders of the Richmond pharmaceutical company.
One of the losing suitors in the three-way bidding war for Robins said it wasn't clear that Robins had accepted the best offer. American Home Products Corp., which had increased its offer to Robins shareholders by $50 million last week, issued a statement in which it questioned whether the Sanofi bid was better than its own. The New York-based company also said that it intended to continue to "consider our options."
Robins' board chose the offer from Sanofi Friday night over competing bids from American Home Products and another company, Rorer Group Inc.
A complex stock transaction included in Sanofi's offer makes it difficult to evaluate the three offers side by side. Although all three bids included the establishment of a court-ordered $2.475 billion trust to pay claims of Dalkon Shield victims, Sanofi's offer calls for the French company to get a 58 percent stake in Robins, while the other two would have been 100 percent takeovers.
Robins would operate as a subsidiary of Sanofi after the takeover, apparently under its existing management.
Robins will incorporate the Sanofi proposal into its plan of reorganization under Chapter 11 of the U.S. bankruptcy code, which is to be submitted by Wednesday.
Murray Drabkin, attorney for the Dalkon Shield Claimants' Committee, said the Sanofi-Robins deal "appears to be more concerned with the entrenchment of Robins' management than with the prompt, full and fair compensation for the hundreds of thousands of Dalkon Shield victims."
Robert M. Miller, counsel for the Equity Security Holders Committee, which represents the holders of about 60 percent of the shares of the company, said the committee still was evaluating the Sanofi offer. "We certainly haven't given the board our endorsement," he said.
Robins President E. Claiborne Robins Jr. said Friday that he believed the Sanofi proposal best serves the interests of the Dalkon Shield claimants -- the company's principal creditors -- as well as the shareholders and other creditors.
U.S. District Judge Robert R. Merhige Jr., who presides in the 29-month-old Chapter 11 proceeding, has set a Wednesday deadline for Robins to file the revised plan.
Merhige also has set $2.475 billion -- to be paid over an undefined "reasonable" period -- as the sum that will compensate victims of the defective IUD, which Robins sold in the early 1970s.
Under differing conditions, Sanofi, American Home and Rorer all proposed the $2.475 billion payout spread over five to seven years.
Drabkin said the Dalkon Shield victims "have suffered hideously from Robins' wrongdoings. To string out payments into the 1990s is simply unacceptable."
Under the Sanofi offer, no more than 50 percent of the $2.475 billion could be paid out in the first two years after approval of the reorganization plan, and no more than 80 percent would be paid in the first four years. The indication is that the payout would be completed in five years.
Yesterday, American Home disclosed that it had proposed to pay $500 million on approval of the reorganization and again on the first anniversary, $300 million on each of the four succeeding anniversaries, and $275 million at the end of the sixth year.
American Home announced on Dec. 23 that it would pay $550 million in stock for Robins, in addition to the $2.475 billion fund.
The offer was increased to $575 million on Wednesday and to $600 million a few hours before Robins accepted the Sanofi offer.
Rorer's latest offer was for a takeover through an exchange of stock, plus payments from the trust over a period not to exceed seven years. Rorer offered to fund the trust with $2.275 million, plus $200 million to be guaranteed under an insurance policy issued by Aetna Life & Casualty Co.
By contrast, the claimants' committee wants all of the $2.475 billion paid into a trust immediately on approval of the plan, which would allow hundreds of millions of dollars in interest to accrue for victims of the defective IUD.
Another issue is the disposition of any unclaimed portion of the $2.475 billion. Under the Sanofi offer, money left over after all claims have been paid would revert to the company.
Drabkin said that for the claimants, the Robins-Sanofi deal "is a heads-we-lose, tails-they-win proposition. ... The company would not be liable for claims in excess of $2.475 billion, but if the claims are less, the company pockets the difference. Sanofi and Robins cannot impose the risks of an uncertain estimation process on the women while taking the benefits for themselves."