Cinven makes €3.6bn offer to buy German drugmaker Stada - http://on.ft.com/2lF6nZB
Private equity group’s formal approach could spark a bidding war among rivals
Stada, a German manufacturer of generic copies of drugs such as Viagra, has received a €3.6bn formal takeover offer from the private equity group Cinven that could spark the start of a bidding war for the company.
The move by Cinven follows a year-long activist campaign to improve Stada’s governance and profitability by one of its largest shareholders, the relatively unknown German activist investor Active Ownership Capital.
Cinven’s offer for Stada is believed to be pitched at close to €58 a share, or about 17 per cent above its closing price on Friday, according to people following the situation closely. If the offer is successful it would mark a coup for AOC, representing a near doubling of Stada’s value in just 12 months.
Advent, Bain Capital, CVC and Permira are all following the situation closely and could make a bid, the people said, adding that private equity bidders believed there were significant costs that could be cut from the business. Stada declined to comment, as did Advent and Permira. Bain Capital and CVC did not immediately respond to requests for comment.
The possible sale of Stada comes after AOC led a successful campaign last year to oust the company’s chairman, culminating in a fiery annual meeting where the activist replaced five members of the company’s supervisory board.
Bad Vilbel-based Stada, which began life in Dresden in 1895 as a pharmacists’ co-operative, has long been considered a takeover target due to its status as one of the last independent manufacturers of generics and non-prescriptive medicines.
As a result of its history Stada’s board has historically been dominated by doctors and pharmacists, something that critics have argued has resulted in it lacking the international experience needed to expand the business.
Ahead of the vote to remove Martin Abend as the company’s chairman, along with other executives, Stada management accused the activist AOC of attempting to engineer a sale of the company, something that the hedge fund denied at the time. Since building up its stake AOC has argued that there was significant scope for the company to improve its operating performance and cut costs.
Matthias Wiedenfels, who had in May taken over from Stada’s longstanding chief executive Hartmut Retzlaff due to illness, admitted at the August shareholder vote that previous actions by the company had cost it “growth, profitability and also credibility”. He later acknowledged in November that Stada could put itself up for sale, noting that “independence is not a goal in itself”.
Cinven declined to comment.