Ivax's notes may end up with all-cash payment under acquisition by Teva, Merrill report says

By Jennifer Chiou

New York, July 25 - Ivax Corp. convertibles may finish up being paid entirely in cash as part of the company's $7.4 billion acquisition by Teva Pharmaceutical Industries Ltd., Merrill Lynch equity-linked analysts Tatyana Hube and Yaw Debrah said in a report following a conference call with the two pharmaceutical companies.

The analysts said the convertibles will become convertible into whichever consideration non-electing Ivax shareholders end up receiving, placing the key determinant of the notes' post-merger treatment in the electing shareholders' hands.

Therefore, Merrill noted, if the Teva stock price stays above $30.69 before the compensation election deadline and all electing Ivax shareholders choose all stock, the non-electing shareholders would end up with an all-cash merger consideration.

The all-cash conversion payment for the Ivax convertibles would happen under those circumstances even though the Ivax shareholders would receive only about half of their merger consideration in Teva stock and half in cash.

Under the terms of the merger, Ivax shares, at the election of shareholders, will be converted into either $26.00 in cash or 0.8471 Teva ADRs, subject to proration, capped at one-half of either cash or ADRs, the company said.

Miami-based Ivax researches and develops pharmaceutical products, including respiratory drugs for bronchial asthma, such as Breathmatic.

Teva develops and markets generic pharmaceutical products that include peptide active pharmaceutical ingredients and also manufactures technologies that include fermentation processes.

Teva stock closed up $0.07 at $31.23 on Monday while Ivax climbed $2.29 to $25.17.

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