A deal needing swift action

N. American Vaccine says sale to Baxter is now in jeopardy

Health care

March 17, 2000|By Mark Guidera | Mark Guidera,SUN STAFF

North American Vaccine Inc. disclosed late yesterday that its deal to be acquired by medical supplies giant Baxter International Inc. on April 3 is in jeopardy because it has yet to meet key conditions of the agreement.

Tom Newberry, a spokesman for Columbia-based North American, said there are two conditions of the $390 million agreement that have not been met.

They are North American's failure to gain approval for its new meningitis vaccine in the United Kingdom and its inability to have a two-month supply of the vaccine ready by April 1.

The company applied for United Kingdom approval for the vaccine in January. British health authorities had pledged to purchase up to $65 million worth of the vaccine this year in an effort to tackle an outbreak of meningitis among college-age youths.

The companies said they have begun discussions to modify terms of the agreement. Newberry said it as unlikely the deal would close before April 3 as originally called for in the agreement. Any changes to the deal would have to be approved by North American shareholders.

In November, Baxter, based in Deerfield, Ill., agreed to buy cash-strapped North American for $390 million, or $7 a share. At the time, Baxter executives said the company wanted to acquire North American to broaden its small, niche-oriented vaccine business, launched three years ago with the purchase of a struggling German company. As part of the deal, Baxter provided North American a $25 million loan to keep the company solvent. Should the deal fall through, North American would have to repay that money or give up several of its key vaccine patents, which were used to secure the loan.

Baxter also agreed to assume North American's $133 million in debt.

Shares in North American rose 12.5 cents yesterday to close at $5.4375. The announcement came after the markets closed.

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