Cinven and Bain Capital beat out competition from Advent International
The board of German pharma company Stada has agreed to a takeover deal with two of three interested private equity companies, with the accepted offer worth around €5.3bn ($5.6bn).
Cinven and Bain Capital made what Stada said was the "most financially appealing offer" of €66 per share, topping an earlier bid from Advent International of €58. That in turn trumped a prior €56 bid from Cinven operating on its own, but by joining forces with Bain the two private equity forms have clinched the deal.
The final bid represents a premium of around 49% to Stada's share price on 9 December 2016, before the long-standing rumours of a takeover started to gather credence, and was preferred over a bid from an unidentified consortium
The three parties have signed an agreement in which the private equity firms pledge to "extensive protection provisions for the employees, production sites and the corporate strategy" according to Stada, which said the deal would strengthen its position on the global stage. Analysts at Jefferies called the agreement "very generous to Stada's shareholders".
Stada's chief executive Matthias Wiedenfels - who is expected to retain his role after the deal goes through - said the company has "reached a result with a high level of certainty in the transaction and a secure financing for the offer".
For months, Stada has been under pressure from rebel investor Active Ownership Capital (AOC) to shake up its operations, a campaign that resulted in the resignation of long-serving chief executive Hartmut Retzlaff and the ousting of chairman Martin Abend last year.
AOC had argued that Stada under-performed compared to its peers in the market in recent years and had a rigid hierarchical structure that was stifling the business and was not equipped to expand its business internationally.
"Our proposal reflects the fact that Stada is a well-positioned healthcare company at a critical juncture of its development," commented Dwight Poler and Michael Siefke, managing directors at Bain, while Cinven partners Supraj Rajagopalan and Bruno Schick said the aim is to help the company "grow into a leading, diversified European player in generics and branded products".
Analysts have suggested that Stada will form the foundation for a series of bolt-on acquisitions that will expand its product range and help it expand its geographic presence.