ICN trying to reabsorb spinoff

The still-new corporate leadership at ICN Pharmaceuticals Inc. took

another step toward repairing a company damaged by executive

in-fighting, regulatory investigations, shareholder lawsuits and

renewed competition to its hot-selling hepatitis drug.

On Monday, the Costa Mesa drug maker announced it would try to

roll back the abortive spinoff of Ribapharm Inc. in April 2002.

ICN tendered a $168 million offer to buy back the public shares of

Ribapharm, which owns the rights to hepatitis treatment ribavirin,

for $5.60 a piece. ICN offered 20% of the company for $10 per share.

“We have concluded that now is an appropriate time to re-integrate

Ribapharm, and we believe that this offer will provide stability to

Ribapharm and its critical scientists, eliminate distractions and

better enable us to focus our efforts on augmenting our growing

specialty pharmaceutical business,” said Robert W. O’Leary, ICN

chairman and chief executive.

Earlier this year, ICN ousted most of Ribapharm’s board members,

saying it had lost confidence in them.

Almost immediately after the buyback announcement, investors rang

the alarm bell. Ribapharm shareholder Maxine Phillips sued the

company on Monday, accusing ICN of angling to buy the stock “as

cheaply as possible,” the Los Angeles Times reported. An ICN

spokesman dismissed the suit as having no merit.

On Friday, shares of ICN rose 0.7% to close at $15.30. RNA shares

rose 1.7% Friday to close at $6.36.

Water Pik Technologies Inc. announced it had agreed to pay $8.1

million up front and as much as $1 million later to acquire Air

Energy Heat Pumps Inc., a privately held manufacturer of heat pumps

for swimming pools. Air Energy Heat Pumps, a Ft. Lauderdale, Fla.

Company, logged $13 million in sales during the past year.

Water Pik agreed to pay $1 million on the back end of the deal, a

payment that will be based on the unit’s 2003 performance.

“A major strategic objective for our pool business has been to

accelerate sales and profit growth through the development of a more

comprehensive package of pool equipment and accessories,” Chief

Executive Michael Hoopis said.

In 2002, Water Pik logged $281.8 million in top-line revenue and

$5.49 million in bottom-line income.

Shares of PIK sank 3.8% Friday to close at $8.06.

UPGRADE/DOWNGRADE

Analysts downgraded two professional-services providers and a

software company this week, as we begin monitoring the activity of

Wall Street analysts’ coverage of local stocks. The information was

reported on Briefing.com.

B. Riley & Co., on Thursday, downgraded software provider FileNet

Corp. to Neutral from Buy based on valuation and said the shares had

exceeded the firm’s $16 price target. Shares of the

$637.3-million-market cap FILE closed Friday at $17.08, a 2.3% drop.

On Wednesday, Robert W. Baird & Co. cut its rating on Resources

Connection Inc. to Neutral from Outperform. The company, with a $49.3

million market capitalization, provides a host of professional

services, including auditing, human resources and information

technology. Shares of RECN closed flat Friday at $20.39.

On Monday, DA Davidson & Co. dropped its rating on Ambassadors

International Inc. to Underperform from Neutral. The

$112.9-million-capitalized Ambassadors provides domestic and

international travel services. Shares of AMIE closed flat Friday at

$11.48.

* PAUL CLINTON covers the environment, business and politics. His

column Wall Street West will run every other Monday. He may be

reached at (949) 764-4330 or by e-mail at [email protected].