Two Japanese drug makers to merge.(Taisho Pharmaceutical, Tanabe Seiyaku)(Brief Article)

Byline: Charles Smith

TOKYO -- Japanese drugmakers Taisho Pharmaceutical Co. and Tanabe Seiyaku Co. said Sept. 17 they had agreed to merge, creating a major new force in Japan's pharmaceuticals sector.

The combined group will be Japan's second-largest drug company by market capitalization, which will be about [yen]1.7 trillion ($14 billion). The group will rank fourth by sales, with combined sales of [yen]468 billion, based on figures for the March 2001 business year.

Taisho ranks eighth among Japanese drug companies in overall consolidated sales, including prescription drugs, while Tanabe is 11th.

Analysts said the merger was effectively a takeover of Tanabe by Taisho, Japan's top producer of non-prescription drugs and health products, although the deal was presented as a merger of equals.

Under the terms of the agreement, the companies will form a holding company in April 2002 as a prelude to a full merger later in the year.

Taisho shareholders will exchange their stock for shares in the holding company on a one-for-one ratio, while Tanabe shareholders will receive 0.55 shares in the holding company for each existing Tanabe share.