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SYNCOR, CARDINAL DEAL ON JUSTICE, SEC ASIAN BRIBERY PROBES ONGOING.

Byline: Evan Pondel Staff Writer

WOODLAND HILLS - Syncor International Corp. and Cardinal Health Inc. said Thursday they have initiated talks regarding their proposed merger, a sign that the deal is likely to materialize despite an ongoing investigation.

Nuclear pharmaceutical company Syncor admitted earlier this month that payments made through its Asian subsidiaries may have been illegal. Cardinal Health discovered the payments while performing its due-diligence efforts toward the acquisition. Spanning about five years, the payments appear to have totaled about $500,000.

``I'm not surprised they (Syncor and Cardinal) are meeting to discuss these issues. I would be surprised, though, if Cardinal agreed to the original terms of the deal,'' said Sean Wieland, analyst with WR Hambrecht in Boston. ``Obviously, Syncor's problems are still a big concern to Cardinal.''

As to the terms of such a deal, analysts still remain baffled. Most foresee a sweetened move for Dublin, Ohio-based Cardinal, which has been in the process of completing its $1 billion acquisition of Syncor for about five months. Others perceive Syncor in a state of indefinite disrepair, with time the only remedy for what ails the Woodland Hills-based company.

A special committee of outside directors and attorneys is currently conducting an investigation on Syncor's dealings abroad. So far, the committee has found that payments were made to customers in Taiwan, including state-owned and private health care facilities. Incidentally, Syncor's chairman, Monty Fu, and his brother, Moses Fu, regional director for Asia, are on paid leave pending the quandary's completion.

The committee has also found questionable payments were made at Syncor operations in at least six other countries in Asia, Latin America and Europe. At issue is whether Syncor violated the Foreign Corrupt Practices Act of 1977, possibly enhancing the company's business prospects through bribery or payments in conjunction with government officials.

Based on the investigation to date, Syncor believes the information it has learned ``would not result in the company's failure to satisfy the conditions to the existing merger agreement.'' Syncor is undergoing discussions of its findings with the Securities and Exchange Commission and the U.S. Department of Justice.

``As far as a time line, we have until the end of the year for the deal, and (Syncor) shareholders will vote on the acquisition by Dec. 6,'' said Allan Mayer, who works for Sitrick and Co., an outside public relations firm that is speaking on behalf of Syncor.

Cardinal Health's acquisition of Syncor is a stock-for-stock transaction in which Syncor would become a wholly owned subsidiary of Cardinal. Terms of the deal call for Syncor to receive .52 Cardinal Health common shares for each outstanding share of Syncor common stock.

``Right now it's a tough question as to how this deal goes through. Both companies are enduring a public relations nightmare,'' said Mitra Ramgopal, analyst with Sidoti Company LLC. in New York.

Syncor shares lost almost 50 percent of their value shortly after the company announced its investigation. Shares rose $1.20, or 4.96 percent, to close at $25.40 Thursday on the Nasdaq market.

Cardinal shares have vacillated only slightly since the investigation was launched. Shares of the pharmaceutical distributor declined $2.95, or 4.5 percent, to close at $62.05 on the New York Stock Exchange.

``I think people are now getting a better handle of what's going on between these two companies,'' said Wieland. ``I do think the course of action taken by Cardinal has been completely appropriate and investors understand that.''
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Nov 22, 2002
Words:578
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