Private equity firm Clayton, Dubilier & Rice (CD&R) could increase its offer for UDG Healthcare to 2.72 billion pounds ($3.79 billion), the London-listed group said on Friday, following shareholder opposition to a previously agreed bid.
Ireland-based UDG said the potential 1,080 pence per share offer would be CD&R’s final one, adding that it plans to recommend the new proposal. In May, both companies had agreed to a 1,023 pence per share offer.
Private equity firms in recent months have expressed interest in several British companies as London-listed firms carry a discount to global peers and the funds see a chance for handsome returns as the UK economy recovers faster than expected.
UDG specialises in healthcare advisory, communications, commercial, clinical and packaging services. It is CD&R’s second takeover target in recent weeks. The fund last week made a bid for Morrisons which was rejected.
While UDG’s board backed CD&R’s first offer, its largest shareholder Allianz Global said last month it planned to reject the bid as it significantly undervalued UDG. It has an 8.65% stake in the healthcare group, Refinitiv Eikon data showed.
UDG said on Friday CD&R was engaging with some shareholders over support for the possible final offer, and confirmed that it had not received any other buyout proposal, nor was it in talks with another party.
Its stock was up 1.5% at 1,062 pence by 0800 GMT.
Just weeks after the first offer, activist investor Elliott took a stake in UDG, while a report in the Financial Times in May said UDG investor M&G was not in favour of CD&R’s prior offer.
Allianz and M&G did not immediately respond to a Reuters request for comment on the new terms. Elliott declined to comment.
RBC, which has a “sector perform” rating on UDG, said in a note the latest offer was a fair one, and raised its price target to match the potential proposal.
Source: Reuters.com