Omnicare buyout rumors persist; analyst: abrupt Amylin sale unlikely; researchers drop Asyst

By Cristal Cody

Tupelo, Miss., April 22 - It's still too early to tell if pharmacy chain Omnicare Inc. faces real takeover potential, an analyst said Wednesday.

In other action, an analyst told Prospect News that activist investor Carl Icahn is unlikely to coax a sale of Amylin Pharmaceuticals Inc. in the near future.

Meanwhile, Asyst Technologies, Inc. made its Chapter 11 bankruptcy filing, but market observers had long given up on the chip equipment maker's survival, Prospect News learned Wednesday.

Moving to Wall Street, stocks were mixed, with only the Nasdaq Composite index closing up.

The Nasdaq gained 2.27 points, or 0.14%, to close Wednesday at 1,646.12, while the Standard & Poor's 500 index lost 6.53 points, or 0.77%, to end at 843.55.

The Dow Jones Industrial Average fell by 82.99 points, or 1.04%, to 7.886.57.

Omnicare takeover rumors

Shares of Omnicare, a Covington, Ky., geriatric pharmaceutical services company, rose more than 8% last week on speculation that drugstore chain Walgreen Co. may bid for the company.

Omnicare will release its first-quarter results on April 30.

Sachin Shah, a senior special situations analyst for ICAP Corporates LLC, told Prospect News that it's unclear how much merit the rumors have.

"Since back in 2008, the company has [been] frequently mentioned as either a buyout or strategic acquisition candidate, especially with ValueAct and JANA Partners in the stock then," he said.

ValueAct Capital Management LP founder Jeffrey W. Ubben was a member of Omnicare's board until he resigned last year. ValueAct holds 3.2% of outstanding Omnicare stock as of Dec. 1, according to a schedule 13D filing with the Securities and Exchange Commission.

New York hedge fund JANA Partners LLC holds 25,084 shares of Omnicare, according to a schedule 13G filing in February with the SEC.

Omnicare shares slid 28 cents, or 1.05%, to close at $26.48. Shares have traded from $18.36 to $32.78 over the past year.

Shares of Deerfield, Ill.-based Walgreen dropped 76 cents, or 2.48%, to close at $29.86.

What's up Icahn's sleeve?

While Icahn is fighting over the MGM Mirage empire, he also is staging a proxy fight against Amylin.

Icahn and Amylin shareholder Eastbourne Capital Management, LLC both want to replace five of Amylin's 12 board members at the annual shareholders meeting on May 27.

Amylin held a conference call on Wednesday with Icahn and Eastbourne but said no agreement was reached.

Icahn denied statements that he wants to sell the company immediately to Eli Lilly & Co., which partners with Amylin on its diabetes drug, Byetta, according to a letter he sent earlier this week to Amylin executives that was filed with the SEC.

In the letter, Icahn also said he would not sell the San Diego-based biopharmaceutical company for less than $30.00 a share.

Icahn helped take over the board of ImClone Systems Inc., which was sold to Indianapolis-based Eli Lilly for $70.00 a share last year.

Eli Lilly is the most logical acquirer for Amylin because the companies have an existing relationship, an analyst told Prospect News.

"I don't know what Icahn or Eastbourne have in mind beyond trying to put the company up for sale. They also could try to structure a deal with Eli Lilly," the analyst said. "But I imagine the Lilly relationship would to some degree hold other potential bidders back from acquiring Amylin."

Also, the market is unsure of what a combination with Amylin would mean for Lilly.

"They've been in this partnership for a long time. Lilly could make it work if they wanted to, but I'm not sure what would drive Lilly to make that decision," the analyst said. "At this point, [Byetta] is experiencing declining sales and all the promise of that partnership is being driven by the follow-on product."

Amylin's next-generation diabetes drug has not yet received approval from the Food and Drug Administration.

Amylin shares rose 19 cents, or 1.76%, to close at $10.99 on Wednesday.

Eli Lilly's stock closed down 60 cents, or 1.80%, at $32.74.

Analysts abandon Asyst

Shares of Asyst Technologies have traded below $1.00 since Oct. 22 and have not reached $10.00 since 2006.

The stock closed Wednesday at 11.3 cents, down half a cent, or 4.24%.

Deutsche Bank Securities Inc. was one of the last firms to research the stock, and they finally gave up.

"We discontinued coverage on that stock," a source told Prospect News on Wednesday.

Asyst said it had been exploring a sale of the company, but a fall in cash flow and new sources of liquidity caused it to seek bankruptcy protection.

The Fremont, Calif.-based company reported a net loss of $7.3 million for the final three months of 2008.

Mentioned in this article

Amylin Pharmaceuticals Inc. Nasdaq: AMLN

Asyst Technologies, Inc. Nasdaq: ASYT

Eli Lilly & Co. NYSE: LLY

Omnicare Inc. NYSE: OCR

Walgreen Co. NYSE: WAG

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