Companies spun off from ICN Pharmaceuticals Inc. in the early 1980shave agreed to combine into one newly formed company, which willbe called ICN Pharmaceuticals Inc.ICN (NYSE: ICN) now is strictly a holding company, based in CostaMesa, Calif., that owns equity positions in the three operatingsubsidiaries. It owns 69 percent of Viratek Inc. (AMEX:VRA), 39percent of SPI Pharmaceuticals Inc. (AMEX:SPI), and 69 percent ofICN Biomedicals Inc. (AMEX:BMI). The proposed merger is expectedto close this fall.SPI is the pharmaceutical sales and marketing arm of the company. Itsells about 600 prescription and non-prescription products, and hasannual sales of $460 million per year, David Calef, ICN's vicepresident, communications, told BioWorld.Viratek is the research and development arm of the company thatfocuses on small molecules, nucleosides and nucleotides. Its broadspectrum anti-viral product, Virazole, which it licenses to SPI, has beenapproved in 47 countries in various formulations for indicationsincluding general hepatitis, influenza, HIV, herpes simplex virus,measles, general herpes and hemorrhagic fever. Calef said 1993 salesof Virazole were about $30 million.ICN Biomedicals serves the life sciences research industry. Its 55,000products sold worldwide include chemicals, reagents, test kits andimmunoassays, Calef said. Sales are in excess of $65 million per year."Now we're at critical mass, where we can self-fund research anddevelopment," Calef said. "We have a product that has been successfulin the marketplace, so we get to reintegrate the companies."Calef said the merger will reduce general and administrative expenses,although "we don't see any major layoffs related to this." Additionalsavings, he said, will come from the reduction of certain income taxes,including the use of net operating loss carry-forwards. A third area ofsavings is expected to come from refinancing long-term debt by issuingabout $150 million of convertible debentures in a public offering.Stockholder Value Enhanced"We believe this merger will greatly enhance stockholder value byenabling the new company to benefit from a simplified corporatestructure, significant cost savings and a strong balance sheet," MilanPanic, chairman, CEO and founder of the companies, said in a newsrelease. "With almost $500 million in combined annual sales on a pro-forma bias, the new ICN will have the critical mass necessary toimplement successfully our long-term strategy for worldwide growth,which includes acquisitions, licensing arrangements and theintroduction of new products through research and development."Under the proposed merger, all shares of common stock issued andoutstanding before the merger will be exchanged for shares in the newcompany under the following ratios: ICN, 1-to-.512; Viratek, 1-to-.499; SPI, 1-to-1; and Biomedicals, 1-to-.197. The ratios are based onthe market value of the companies from June 23 to July 22. The newcompany intends to apply for listing on the New York Stock Exchange.Three of the companies' stock decreased in value Tuesday. Viratek lost75 cents, to close at $10 per share. SPI closed at $19.75, down $1.25 intrading of 404,400 shares. ICN was down 38 cents, closing at $10.13with 418,000 shares traded. Biomedicals was up 38 cents, closing at$3.88 per share. n

-- Jim Shrine

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