China may OK Wyeth deal by fall; Addax stock sale sparks concern; Dioro, Northgate in talks

By Cristal Cody

Tupelo, Miss., July 20 - Nearly all of Wyeth's investors voted to approve its $68 billion acquisition by New York-based Pfizer Inc. on Monday.

Meanwhile, a market source said Monday that China's extended review of the drug makers' combination should end by fall.

In other situations, a market source said Monday that shareholders of Addax Petroleum Corp. should not "attach significance" to a stock sale by directors ahead of the company's C$8.27 billion buyout.

Also on Monday, Northgate Minerals Corp. confirmed it is in material transaction talks with the board of directors of Dioro Exploration NL, which is under a $68.50 million hostile takeover attempt by gold miner Avoca Resources Ltd.

A Northgate and Dioro marriage has potential, an analyst told Prospect News on Monday.

On Wall Street, investors stayed positive and extended a rally in stocks that sent the Standard & Poor's 500 index up to its highest close since November.

The S&P 500 added 10.75 points, or 1.14%, to close at 951.13, while the Nasdaq Composite index gained 22.68 points, or 1.20%, to end at 1,909.29.

The Dow Jones Industrial Average climbed 104.21 points, or 1.19%, to 8,848.15.

Wyeth, Pfizer's China review

Madison, N.J.-based Wyeth said Monday that more than 98.00% of shareholders voted in favor of the acquisition by Pfizer.

At the closing of the transaction, Wyeth stockholders will receive $33.00 in cash and 0.985 of a share of Pfizer stock for each share of Wyeth stock.

Pfizer said on Friday that the European Commission cleared the union with the divestiture of some animal health assets but that China's Ministry of Commerce had extended its deal review.

China should approve the transaction by mid-October, a market source said Monday.

"In terms of timing, the Chinese phase 2 review can take up to 90 calendar days," the source said. "This may be extended with an additional 60-day period if necessary, which we believe is unlikely."

The merger also requires clearance from regulators in the United States, Canada, South Africa and Australia.

Pfizer and Wyeth expect the transaction to close by the fourth quarter.

Wyeth's stock closed up 13 cents, or 0.28%, at $46.10 on Monday.

Shares of Pfizer added 30 cents, or 2.01%, to close at $15.26.

Addax share sell-off

Calgary, Alta.-based oil and gas explorer Addax said on June 24 it will take the offer of C$52.80 a share in cash by Chinese firm Sinopec International Petroleum Exploration and Production Corp.

On July 14 and 15, directors of Addax sold 120,000 shares in the open market.

The stock sale was permitted under the lock-up agreement with Sinopec and appears to be for tax purposes, a market observer said Monday.

"We believe that the sale of shares by the directors of Addax does not indicate a lack of confidence in the closing of the deal," the source said. "We understand that under Swiss tax law, employee stock options are taxed when they vest. The only directors which have sold shares are those who are residents in Switzerland."

Executives have agreed to tender their stock, which represents about 38.00% of outstanding Addax shares, in the offer set to close on Aug. 14.

The deal must receive regulator OKs from several governments that include the People's Republic of China.

Beijing-based oil and gas investor Sinopec is owned by the China Petrochemical Corp.

The deal includes a C$300 million termination fee if China does not give its approval by Aug. 24.

Addax shares rose C$0.27 cents, or 0.54%, to close at C$50.19.

Dioro in deal talks

Dioro also confirmed it is in talks with gold and copper producer Northgate and said in a statement on Monday that the "details of the proposed transaction will be announced within one week."

The gold miner also reaffirmed its recommendation for shareholders to reject the hostile offer from Avoca, which owns about 17.66% of Dioro's outstanding stock.

"On the basis of its discussions with Northgate to date, the board of Dioro is of the view that the proposed transaction, if completed on the terms currently being contemplated, is likely to be a superior transaction in value to the current Avoca offer," Dioro said in the statement.

Perth, Australia-based Avoca has offered one share for every 2.40 shares of Dioro, for a deal value of about A$0.748 a share.

Dioro said that it believes the company's stock is valued at A$1.40 to A$2.28 a share.

Avoca on Monday extended its tender offer for Dioro shares by a week to July 28. Only about 2.71% of Dioro shares have been tendered, Dioro said.

An analyst said in an interview Monday that a combination of Vancouver, B.C.-based Northgate and Nedlands, Western Australia-based Dioro is a "potentially positive move."

Northgate has the financial holdings to best Avoca's offer with "a reasonable price," the analyst said.

Also, no regulatory issues are foreseen in a Northgate/Dioro combination.

"This will be a fairly easy deal to complete," the analyst said.

Dioro shares closed unchanged at A$0.71.

Northgate's stock rose C$0.07, or 2.70%, to C$2.66.

Avoca shares closed unchanged at A$1.75.

Mentioned in this article:

Addax Petroleum Corp. Toronto: AXC

Avoca Resources Ltd. Australia: AVO

Dioro Exploration NL Australia: DIO

Northgate Minerals Corp. Toronto: NGX

Pfizer Inc. NYSE: PFE

Wyeth NYSE: WYE

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