Omnicare Launches Hostile Bid for NeighborCare

Updated from 10:31 a.m. EDT

NeighborCareNCRX shares were up more than 58% Monday morning after fellow institutional pharmacy provider OmnicareOCR launched a hostile bid to buy it for $1.5 billion.

Omnicare said it communicated its $30-a-share cash offer in a letter to NeighborCare after initially being rebuffed by the company's board in early March. NeighborCare's stock closed Friday at $17.16 and was recently trading at $28.01, up 58.3%, or $10.34.

In a statement, NeighborCare said the new bid is similar to the one it previously rejected, but said it would "review this latest proposal consistent with its fiduciary duties and responsibilities." The company hired Goldman Sachs and and the law firm Wachtell Lipton Rosen & Katz to assist in the review.

Omnicare claimed its bid is good for both sides.

"As we discussed in early March, and as set forth in my letter to you dated March 30, 2004, we believe that a combination of Omnicare and NeighborCare is compelling and will provide substantial benefits to both companies' shareholders and other interested constituencies," it said in a letter to NeighborCare's CEO. "We are, however, disappointed by your rejection of our offer to acquire NeighborCare and your board's unwillingness to engage in any further discussion of the matter.

"For this reason, Omnicare is making public its offer to acquire all of the outstanding shares of NeighborCare common stock for $30.00 per share in cash," it said. "As we have discussed before, if you or the NeighborCare board have a different view on the form of consideration or other aspects of our offer, we are willing to discuss this, as well as any other matter relating to a proposed combination of Omnicare and NeighborCare, with you."

NeighborCare provides pharmacy services to long-term care and skilled nursing facilities, specialty hospitals, assisted and independent living communities and other groups. Omnicare is the nation's largest provider of professional pharmacy, related consulting and data management services for skilled nursing, assisted living and other institutional health care providers.