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No deal for Stada as private equity takeover bid collapses

65.52% of investors supported the takeover, just shy of the 67.5% needed to close the deal


Bain Capital and Cinven's planned buyout of Germany's Stada has failed at the last hurdle, with too few of Stada's shareholders agreeing to the deal by the deadline.

It was a close thing, with the private equity firms gaining the support of 65.52% of investors for the takeover - just shy of the 67.5% needed to seal the €66 per share deal which would have valued Stada at around €5.3bn including debt.

The consortium said in a statement that there would be no extension to the deadline, adding that all tendered shares would not be returned to their former owners. They had already extended the deadline once and reduced the minimum acceptance threshold from 75% after a lower-than-expected turnout from Stada's retail investors, and are now prohibited from making another bid for 12 months under EU regulations.

Stada's board had lent its support to the Bain-Cinven offer over a rival €58 per share bid from Advent and Permira. Shares in the German pharma company - which specialises in over-the-counter (OTC) and generic pharmaceuticals - were down more than 5% this morning to just under €59 as investors reacted to news of the deal collapse.

Stada's chairman Matthias Wiedenfels said that the decision reflected "confidence by shareholders in the ability of the company to go it alone”, and that the board members "respect the close vote of our shareholders and understand it as a mandate to press ahead with our successful growth strategy".

That can't disguise the fact that almost two thirds of shareholders were in favour of the takeover, which would have made Stada the largest publicly-traded European company to go into private ownership for many years.

Stada insisted that the failure would have no impact on its short- and medium-term growth targets, and it pledged to take measures to meet them including "to strengthen the segments of generics and branded products, to tackle the potential of new and existing markets, to reduce the complexity of the company’s portfolio and its organizational structure, and to improve its cost base".

The company is expecting to post net income of €195m-€250m on revenues of €2.28bn-€2.35bn this year, rising to €250m-€270m and €2.65bn-€2.70bn in 2019.

The private equity bids came after a protracted period of pressure from rebel investors - including a group called Active Ownership Capital (AOC) - that were unhappy with the management of Stada and particularly what they claimed was a rigid, hierarchical management structure that was hampering the group's ability to develop in new directions.

The campaign resulted in the resignation of long-serving chief executive Hartmut Retzlaff as well as the ousting of chairman Martin Abend last year. PMLive contacted AOC for comment on the failure of the deal but had not received a response at the tie of writing.

Article by
Phil Taylor

27th June 2017

From: Sales



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