By James McNair
Enquirer staff writer

Omnicare is waving a $30 bill for every share of stock in its rival NeighborCare. But check the stock price listings, and you'll see that NeighborCare shares can be had for about $25.

Is there some easy money to be made here?

Omnicare, a Covington company and the nation's leading supplier of medicine to nursing homes, launched its hostile bid for Baltimore-based NeighborCare on June 4, and its latest tender offer expires Tuesday at 5 p.m.

As of July 30, Omnicare said 46 percent of NeighborCare's shares had been tendered. The company would not say how many more shares were in the fold as of Friday.

In the meantime, investors seem to have lost their appetite for the $1.3 billion proposal. In mid-June, the advances by its competitor drove up the price of NeighborCare's shares to the $32 level.

But disappointing earnings reports from NeighborCare and Omnicare and the hint of a tougher Federal Trade Commission stance on the merger has since doused the enthusiasm with cold water.

"I think investors are awaiting some kind of word out of the FTC," said Frank Morgan, an analyst with Jefferies & Co. in Nashville.

"Both companies are obviously in the document-production phase with the FTC," he said.

"The most critical catalyst at this point is not getting a red light from the FTC. Once that happens, I think then you'll see some serious negotiation between the two companies."

Whatever the reason might be, Omnicare's $30-a-share tender offer represents a 20 percent premium over NeighborCare's share price. That gap is the fourth widest among pending U.S. takeover bids of $250 million or more, according to Bloomberg Financial.

Like Omnicare, NeighborCare sells pharmaceuticals, supplies and equipment to long-term care providers. The company, which did not return phone calls last week, rejected Omnicare's direct offers. Its chairman, John Arlotta, has expressed no interest in doing a deal.

"If there was a change in the price, we'd sit down and talk," he said in one interview in early August.

But Omnicare likewise hasn't budged. It says the $30 offer represents a 70 percent premium over NeighborCare's share price before Omnicare pitched the merger on May 24.

"All in all, it's a compelling opportunity for the NeighborCare shareholders," Omnicare CEO Joel Gemunder said in a conference call with analysts on July 26.

With 46 percent of NeighborCare's shares in favor of the takeover, Omnicare would seem to be almost home-free in its pursuit of its rival. One obstacle is a poison pill that would trigger the issuance of more NeighborCare shares and make a takeover unpalatable. But the FTC review is considered the most serious impediment.

"Generally speaking, the FTC is trying to ensure that there are an ample number of competitors remaining after the merger, such that the price of goods and services affected by the merger will not increase," said Lee Anne Washington, a senior editor for the Takeover Stock Report, an online daily newsletter that analyzes mergers and acquisitions for investors.

Washington said the FTC looks at markets on a geographic and customer-segment basis, examining the number of firms serving those markets and their market shares before and after a merger.

"It's really not unusual for hostile situations to mature until the end of the process, which includes regulatory reviews," Washington said. "Some significant shareholders won't tender their shares until they know the deal is going to go through."

The merger of Nestle S.A. and Dreyer's Grand Ice Cream survived an FTC review in 2003 - but only after the companies agreed to sell Dreyer's Dreamery, Godiva and Whole Fruit sorbet brands and Nestle's distribution assets to a third company. The agency also conditioned Shell's 2002 acquisition of Pennzoil Quaker State Co. on a divestiture.

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E-mail jmcnair@enquirer.com.