February 25, 2017
Bain Capital has made a €3.6bn offer to buy Stada, as the bidding war between private equity firms for the German maker of generic versions of drugs such as Viagra nears its climax.
The offer from the US-based buyout group values shares in Stada at €58 a share and comes two days after its rival Advent International also submitted an offer at that level, according to people close to the situation.
The differences between the two offers could put pressure on Stada’s board to make a decision in the next 48 hours because Advent’s offer, which is fully financed and includes a dividend payment to Stada shareholders, has a Monday deadline.
The Bain Capital offer does not come with a deadline, which may be preferable to the Stada board as they continue to receive interest from other parties. However, it also does not include the dividend payment, worth roughly €0.75, and is not yet fully financed.
The bids come two weeks after the Financial Times revealed that a third private equity firm, Cinven, kicked off the battle for Stada with a €56 a share bid.
Stada and Bain declined to comment on the Bain bid.
Earlier on Saturday, Stada said in a statement that it has now entered into a structured bidding process to ensure that all bidders received the same level of information. It confirmed three bidders had been invited to conduct due diligence.
It said: “In the interest of all shareholders and stakeholders of the company, further potential for value enhancement shall be presented in this process in order to be reflected in possible offer prices. Moreover, the value of the strategic concepts of the interested parties as well as their willingness to grant protective mechanisms for stakeholders will also be examined.”
The bidding war follows a year-long campaign to improve Stada’s governance and profitability by one of its largest shareholders, the relatively unknown German activist investor Active Ownership Capital. The buyout groups believe there is further room for cost cutting and operational improvement at the drugmaker after years of poor management, marking a rare opportunity in Europe to find a takeover asset of scale.
Moreover, there appears to be limited interest from strategic bidders for Stada, allowing the private equity firms to compete in and auction where they will not get out bid by a company already operating in the segment that can afford to pay more because of synergy possibilities.
In its pitch to speed up the auction, Advent said it would boost the company’s growth by investing in new products and commit to keeping Germany as its industrial base. It also said it had no intention to sell or split off significant parts of the business.
Stada was founded in Dresden in 1895 as a pharmacists’ co-operative and is one of the last independent manufacturers of generics and non-prescription medicines. Its board has been dominated by doctors and pharmacists, something that critics have argued has resulted in it lacking the international experience needed to expand the business.
Matthias Wiedenfels, who in May took over from Stada’s longstanding chief executive Hartmut Retzlaff, admitted at the August shareholder vote that previous actions by the company had cost it “growth, profitability and also credibility”.
Shares in Stada, which are trading at their highest levels on record, closed at €57.74, giving it a market value of €3.58bn.
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