Johnson & Johnson tender offer for Omrix expires Friday; Emageon buyout lacks financing

By Cristal Cody

New York, Dec. 24 - Deal activity remained light on Christmas Eve and is expected to remain even lighter through the holiday week.

Some activity will be stirring before the end of the month, with at least two tender offers set to expire.

Coming up, Johnson & Johnson's $25-a-share cash tender offer for Omrix Biopharmaceuticals Inc. expires on Friday.

Analysts expect the $438 million deal to close with few problems. As of Dec. 19, 23% of Omrix shares had been tendered, but the small turnout was blamed more on the holiday slowdown.

Johnson & Johnson also has a $31-a-share cash tender offer open for Mentor Corp. through Jan. 12. The $1.07 billion deal is expected to close in the first quarter of 2009.

Johnson & Johnson shares fell 12 cents, or 0.20%, to close at $58.56.

Omrix shares fell 2 cents, or 0.08%, to close at $24.91.

Mentor shares fell 3 cents, or 0.10%, to close Wednesday at $30.86.

Also ahead before the year closes, King Pharmaceuticals Inc.'s $37-per-share buyout offer for Alpharma Inc. is set to expire on Dec. 29. More than 90% of shares already have been tendered in the $1.6 billion deal.

In trading Wednesday, Alpharma shares fell 9 cents, or 0.25%, to $36.21.

King's stock rose 3 cents, or 0.29%, to close at $10.34.

The stock market closed early Wednesday on light trading volumes but with some holiday cheer to share.

Investors broke a five-day trading fall and sent the Dow Jones Industrial Average up 48.99 points, or 0.58%, to 8,468.48.

Also catching a lift, the Standard & Poor's 500 index gained 2.26, or 0.26%, to 865.42 and the Nasdaq Composite index rose 3.36, or 0.22%, to end the day at 1,524.90.

Emageon buyout closing uncertain

Christmas Eve brought more bad news for Emageon Inc.'s buyout by Health Systems Solutions Inc., which doesn't have the financing to cover the $62 million deal.

Emageon said Wednesday that it received a letter from Health Systems Solutions that the bank set to finance the deal, Stanford International Bank Ltd., will not provide the funding to close the buyout.

Emageon had demanded earlier in the week that Health Systems transfer the $62 million buyout payment. Shareholders approved the sale on Dec. 17.

According to the letter, Health Systems continues to try to persuade Stanford Bank to fund the transaction.

Health Systems representatives did not immediately return a phone call for comment.

Health Systems agreed to pay $2.85 a share in cash for the company, a 37% premium to the stock's closing price on Oct. 13.

Emageon shares have plunged since and they fell a further 6 cents, or 3.82%, to close Wednesday at $1.51.

Health Systems' stock closed unchanged at $2 a share.

Emageon CEO Chuck Jett said in a statement that the company remains in discussion with Health Systems and the bank in an attempt to close the deal.

"We are also hopeful that Health Systems will begin to take all such actions as required under the merger agreement to remedy the failure to finance the transaction and close promptly," he said. "Failure to remedy the financing promptly will require us to seek all remedies to enforce our rights for the benefit of our stockholders."

According to the proxy statement the companies filed with the U.S. Securities and Exchange Commission, the merger must be completed by March 31, 2009.

Emageon will pick up at $5 million termination fee if it terminates the merger because Health Systems has not received the financing, according to the merger agreement.

SI International buyout set to close

One deal did move forward Wednesday.

SI International Inc.'s $510 million acquisition by Serco Group plc received the final regulatory approval needed to close, the companies said Wednesday.

SI International said the Committee on Foreign Investment in the United States completed the review of the acquisition.

The Reston, Va.-based company, which agreed to be acquired by London-based Serco in August for $32 a share in cash, said the deal would close soon. A company representative did not immediately return a message for the exact date.

SI International shares rose 46 cents, or 1.46%, to close at $31.93.

United Refining on the hunt

In other news, United Refining Corp. said Wednesday that directors discussed possible deals with bankrupt SemGroup LP, which had revenues of more than $14 billion in 2007.

SemGroup, a privately held energy services provider, filed for Chapter 11 bankruptcy protection on July 22, 2008.

John Catsimatidis, chief executive officer of United Refining, said in a statement that his representatives now control a majority of seats on the management committee of SemGroup's general partner, SemGroup LP LLC.

United Refining Energy has about $450 million in cash and is organized solely to make acquisitions, joint ventures and stock exchanges.

"The company is focusing on identifying a prospective target business in the energy industry, but is not limited to pursuing acquisition opportunities only within that industry," United Refining said in the statement.

United Refining shares rose 3 cents, or 0.33%, to close at $9.08.

Mentioned in this article:

Alpharma Inc. NYSE: ALO

Emageon Inc. Nasdaq: EMAG

Health Systems Solutions Inc. OTC: HSSO

Johnson & Johnson NYSE: JNJ

King Pharmaceuticals Inc. NYSE: KG

Mentor Corp. NYSE: MNT

Omrix Biopharmaceuticals Inc. Nasdaq: OMRI

SI International Inc. Nasdaq: SINT

United Refining Energy Corp. AMEX: URX

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