Berlin: Stada Arzneimittel agreed to sell itself to Bain Capital and Cinven for €5.3 billion ($5.6 billion), giving the private equity firms control of one of the last independent generic-drug businesses in Europe after a long-fought takeover contest.
Bain Capital and Cinven will offer €65.28 plus a dividend of €0.72 per Stada share, the Bad Vilbel, Germany-based drugmaker said in a statement Monday. That’s about 49 per cent higher than the price in December, when talk of a takeover first surfaced, it said. Stada shares soared to their highest on record following the announcement.
The deal would give the buyers access to German and Russian markets for over-the-counter and copycat medicines and marks another step in the consolidation of the generics industry. Stada eluded a takeover for years thanks to an unusual shareholder structure and entrenched management, until investor Active Ownership Capital Sarl led a revolt last year. In August, former Chief Executive Officer Hartmut Retzlaff resigned after 23 years at the helm.
New CEO Matthias Wiedenfels pledged to make Stada more profitable. In February, the offers from private equity began flowing, and weeks of talks ensued with firms including Advent International Corp., Permira, Cinven and Bain Capital.
“We have reached a result with a high level of certainty in the transaction and a secure financing for the offer,” Wiedenfels said Monday on a conference call with reporters. He said he hopes to remain in the CEO position after the deal is completed.
Shares of Stada rose almost 11 per cent to €64.62 at 9:17am in Frankfurt trading. The stock has jumped 79 per cent in the last year.
The maker of Grippostad, which Stada says is Germany’s best-selling cold remedy, last month raised its medium-term financial outlook, saying it aims to lift sales to as much as €2.7 billion in 2019 and adjusted earnings before interest, taxes, depreciation and amortisation, a key measure of profit, as high as €590 million.
Bain Capital and Cinven agreed to honour the company’s existing union contracts and refrain from business-related layoffs for four years, other than those already planned, Stada said. The location of its headquarters and key business units will remain unchanged.
The buyout firms will make a formal offer for the shares, and the company’s executive and supervisory boards expect to recommend that shareholders tender their stock, Stada said. The €5.3 billion deal price includes Stada’s net debt.
“We believe this is very generous to Stada’s shareholders,” James Vane-Tempest, a London-based analyst for Jefferies, said in a note to investors. Bain Capital and Cinven are offering €1 per share more than Jefferies had estimated private equity bidders would have been able to pay, Vane-Tempest said.
