Snyder Communications spins off health care unit

Daniel Snyder, sister will be co-chairmen

Eran Broshy is CEO

June 24, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

Snyder Communications Inc., a Bethesda-based direct marketing and advertising firm, said yesterday that it will spin off its health care marketing business to create a publicly traded company called Snyder Healthcare Services Inc.

Chairman Daniel M. Snyder, 34, who recently purchased the Washington Redskins for $800 million, will be co-chairman of the new company with his sister, Michele Snyder.

Eran Broshy, who has worked at the Boston Consulting Group for the past 14 years, was named chief executive officer of Snyder Healthcare Services. Broshy was responsible for leading the consulting firm's North American health care practice.

"Now, the business is difficult for employees, clients and investors to understand; they view it as multiple companies," said Clay Perfall, chief financial officer.

"After this transaction, Snyder Healthcare will focus entirely on the pharmaceutical and health care market, and it will be simpler to understand. It will be easier to retain employees and it will be more attractive to investors."

Ann Brodsky, an analyst at Vector Securities International, agreed with that reasoning. "I think it's very positive. The greatest benefit is that investors will now be able to truly value each of Snyder's divisions, and that was a problem in the past."

Brodsky, who recommends that investors buy Snyder stock, said its shares are undervalued and that she thinks they are worth $46. The company's shares closed in trading yesterday at $28.625, up $1. The health care stock, which will be listed on the Nasdaq stock market, will be distributed in September to stockholders of Snyder Communications, which will continue to be traded on the New York Stock Exchange.

At the same time, Snyder Communications will issue a new class of stock that will track the performance of its circle.com division, which develops Web sites and electronic commerce systems.

"After the [health care] transaction, Snyder Communications and Snyder Healthcare Services will operate as independent, strategically focused businesses, each with a leadership position in their respective industry," Snyder said.

Pub Date: 6/24/99

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