Sterling files suit to prevent takeover Hostilities are escalating in the attempted $4.2 billion takeover of Sterling Drug Co. by Swiss-based Hoffmann-La Roche, in which Roche has proposed to purchase 59 million shares of Sterling stock at $72 per share. Last week Sterling filed suit against Roche in U.S. District Court, Wilmington, Del., alleging falsification of information to hide profits and avoid taxes, failure to disclose details about the company, and breaking of U.S. insider trading laws. At the same time, the U.S. Securities & Exchange Commission began an investigation in Switzerland of possible insider trading of Sterling stock by individuals within Roche before the bid was actually made. Roche, according to press reports, said it would cooperate with the investigation. The differences between the financial reporting requirements in the U.S. and in Switzerland could prove to be a pivotal factor in determining whether Roche succeeds. Swiss companies traditionally have not had to report financial information in as much detail as U.S. corporations. Nor have they been willing for the most part to do so. Sterling maintains in its suit that "Generally accepted accounting principles in the U.S. are a specific, comprehensive, and codified system of rules that regulate financial disclosure. By contrast, there is no specific comprehensive body of accounting principles regulating financial disclosure that is generally accepted in Switzerland." The suit goes on to say that in Switzerland there are only a few vague rules or policies that govern financial accounting and that the offer is therefore false and misleading. Thus, Roche's "offer to purchase" fails to contain the full-blown income statements and balance sheets that U.S. companies and investors are accustomed to. Indeed, the document contains slightly more financial information on Sterling than it does on Roche. Sterling also maintains that the documents do not disclose just who
controls Roche. "According to recent reports," the suit says, "members (by blood or marriage) of the families descended from [Roche's] founder" control between 50 and 75% of the company's voting stock. The voting stock consists of 16,000 "bearer shares" that render it impossible for outsiders to determine who the actual owners are and, consequently, who would control Sterling if the tender offer is successful, according to court documents. In spite of the suit against Roche, Sterling has still not recommended that its stockholders reject the proposal, only that they wait and see what will happen. Speculation centers on a friendly acquisition by a "white knight." There has been some talk that this could be the West German chemical company
Bayer, but this is based more on Sterling's control of the Bayer crosstrademark in the U.S. and its manufacture of Bayer aspirin than on any concrete evidence. Bayer has concluded agreements with Sterling that permit it to use the Bayer name in the U.S. in certain situations. In another development earlier this month, ICN Pharmaceuticals announced that it had increased its holding in the voting shares of Hoffmann-La Roche to 7.3% from 6.3%. Milan Panic, ICN's chairman and chief executive officer, said that, depending on market conditions and other circumstances, the company could purchase additional shares. ICN has been cleared by the Federal Trade Commission to purchase up to 25% of Roche's stock. William Storck, New York
Du Pont celebrates 50 years of nylon, Teflon Du Pont's press briefing last week was unusual to say the least. From Washington, D.C.'s National Press Club, Du Pont chairman Richard E. Heckert and the company's senior vice president for technology, Alexander MacLachlan, used a satellite hookup to pay tribute to the inventors of nylon and Teflon. The occasion was the 50th anniversary of the unveiling of the company's nylon 66 and Teflon products. "Nylon was more than a miracle product," said Heckert. "Its discovery sparked a materials revolution. [We are] paying tribute to the individuals who started and sustained that revolution." On hand was Roy J. Plunkett, who discovered Teflon tetrafluoroethylene resin by accident during his studies of fluorinated refrigerant gases. Wallace H. Carothers, who developed nylon by coupling hexamethylenediamine with adipic acid, committed suicide in 1937, depressed over feelings of failure. But his work spawned the synthetic fiber industry and the creation of new classes of molded plastic parts. "Research and development under way in our laboratories today is shaping an even more exciting future," Heckert said. MacLachlan added that Du Pont has earmarked $1.3 billion for research this year, 5%
more than in 1987. This includes R&D for Du Pont's Conoco subsidiary and is therefore not strictly chemical R&D. The work ranges from aerospace and genetic engineering, to data storage and telecommunications. Robert C. Forney, executive vice president for R&D, pointed to development of the Genesis 2000 automated DNA sequencer as one of the most remarkable of the compa-
In 1930s photo, Carothers works in Du Pont's Wilmington lab January 18, 1988 C&EN S
