Bain and Cinven prepare for fresh €4.1bn Stada bid
Private equity groups court hedge funds ahead of new offer for German drugmaker
Bain Capital and Cinven are preparing to submit a fresh €4.1bn takeover for Stada, the German generic drugmaker, as soon as this week, resuscitating what would be Europe’s largest buyout in four years just days after their previous offer collapsed.
The private equity groups have been in contact with Stada and BaFin, the German regulator, to secure a waiver from a one-year standstill that they were subject to after they failed to receive sufficient backing from Stada shareholders, according to multiple people close to the process.
Bain and Cinven have yet to receive clearance from BaFin and Stada but those approvals may come in the next 48 hours, allowing them to make a new offer valuing the maker of generic Viagra at the same €66 per share price, some of these people said.
The bidders have also been in touch with a number of hedge funds who hold Stada shares. They have received irrevocable acceptances from some of those investors who did not tender their shares in the previous offer period, one person added.
Bain and Cinven received acceptances from 65.52 per cent of shareholders for their original offer, just 2 per cent short of their 67.5 per cent target. The bid’s failure was attributed to several factors, including the role of a handful of hedge funds who refused to tender their shares in the hope of forcing the bidders to pay slightly more.
The private equity duo failed last week to receive sufficient backing from Stada shareholders for their offer, even though it represented a 49 per cent premium to Stada’s undisturbed share price and had the backing of the target company’s board and management.
Both Stada and BaFin must agree to waive a one-year standstill that went into effect when the original offer collapsed. To do so, Stada must evaluate a few factors including whether the new bid is competitive and whether there is a lower execution risk to it.
To satisfy the latter condition, Bain and Cinven are planning to drop the acceptance threshold from 67.5 per cent in the previous offer period to 65 per cent or lower.
The offer could also include an accelerated tender period, allowing the bidders to pass the threshold before Stada’s annual general meeting, which is scheduled for August 30.
Stada’s shares closed at €62.50 on Monday, with investors expecting a new bid for the company as being likely to come.
Stada and Cinven declined to comment. Bain did not immediately respond to a request for comment.