By Charles Craig
Systemix Inc.'s majority owner, Swiss drug maker Novartis, apparently has succeeded in its attempt to buy out minority stockholders by increasing its October 1996 offer by $2.50 per share to $19.50 for a takeover price of more than $76 million.
The deal could be upset if Novartis does not receive at least 51 percent of the shares from minority holders during the tender period, which begins Friday. However, Systemix officials said Novartis, which owns 73.2 percent of Systemix, is expected to easily gain a majority of the 3.9 million shares it does not already hold.
The takeover should be complete within two months. Systemix's stock (NASDAQ:STMX) ended Monday at $19.312, up $4.
Novartis was formed last year in a merger of fellow Basel, Switzerland, pharmaceutical firms, Sandoz Ltd. and Ciba-Geigy Ltd. The consolidation was proposed in March 1996 and completed in December.
In October 1996, Systemix's three independent board members rejected as too low a $17-per share, or $66 million, buyout offer from Sandoz Ltd. When the proposal was made in May 1996, Systemix was trading at $11, a 52-week low.
In 1991, Sandoz paid $392 million, which was $65 per share, for 60 percent of Systemix, of Palo Alto, Calif. In that deal, Sandoz also agreed any takeover proposal would have to be approved by at least two of three independent directors sitting on Systemix's 11-member board. Sandoz holds six seats and Systemix occupies the other two.
Systemix said Monday the Novartis buyout at $19.50 per share was approved by all three independent directors: Joseph Ruvane, a former president and CEO of Glaxo Inc., of Research Triangle Park, N.C.; Harold Edgar, of Columbia University Law School in New York; and Edgar Schollmaier, CEO of Alcon Laboratories Inc., of Fort Worth, Texas.
Systemix president and CEO, John Schwartz, indicated company executives also were in favor of the takeover. In a prepared statement, he called Novartis' move "a very positive event."
Wendy Hitchcock, Systemix's chief financial officer, said as of Jan. 8, 1997, her company had about 14.5 million shares outstanding. That figure does not include shares represented by stock options held by employees and others.
Novartis owns 10.6 million shares, leaving minority stockholders with 3.9 million.
Hitchcock said Monday it was too early to discuss potential structural changes, if any, in Systemix.
The takeover adds to Novartis' in-house gene and cell therapy capabilities. In 1995, Sandoz acquired Genetic Therapy Inc., of Gaithersburg, Md., for $295 million.
Systemix lead technology program is its isolation and use of a substantially pure subset of hematopoietic stem cells, called CD34(+)Thy(+)Lin(-). The cells are responsible for renewing all blood and immune system cells and could have broad applications.
The company is conducting clinical trials using autologous CD34ThyLin stem cell transplants to reconstitute chemotherapy-destroyed bone marrow of multiple myeloma patients. In another study, allogeneic transplants of CD34ThyLin stem cells are being used in utero to correct genetic diseases in unborn children.
Systemix also has a gene therapy program for treatment of HIV. *