Private equity groups Bain Capital and Cinven failed to win the required shareholder acceptances to take over German generic drugmaker Stada (STAGn.DE), the companies said late on Monday.
Investors representing 65.52 percent of Stada’s equity capital tendered shares in the agreed 5.3 billion-euro ($5.9 billion) deal at 66 euros per share, short of the 67.5 percent target that the bid was conditional on, Stada said.
Shares in Stada dropped 6.5 percent in pre-market trade, which would put them at their lowest level since Bain and Cinven raised their bid to beat out a rival consortium of Advent and Permira in an auction for the drugmaker in April.
The bid was widely regarded as attractive, given the premium of 49 percent over the share price before initial reports emerged that a takeover was on the cards.
But according to sources, the buyout groups struggled to galvanise non-professional, often elderly investors, many of whom the bidders feared were ignoring or forgetting letters from their custodian banks.
They lowered the threshold for the deal to go through from 75 percent earlier this year because of concerns about low uptake.
For Stada the outcome of the takeover bid was an expression of shareholders’ desire to keep Stada independent.
“We respect the close vote of our shareholders and understand it as a mandate to press ahead with our successful growth strategy,” Chief Executive Matthias Wiedenfels said.
“However, we also regard this decision as a mark of confidence in Stada’s abilities, which our employees have impressively demonstrated, in particular over the past months.”
WHAT NEXT?
Stada said that the termination of the deal did not have an impact on its earnings targets.
For 2017, Stada still expects sales adjusted for currency and portfolio effects of 2.28 billion to 2.35 billion euros, with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of 430 million to 450 million euros and adjusted net income of 195 million to 205 million euros.
“The question now is if the former bidders, Advent and Permira, emerge again or if Bain and Cinven try a second bid,” a local trader said.
Many buyout firms are flush with cash after recent divestments and cheap borrowing costs and they are particularly attracted to healthcare assets for their reliable cash flows that are immune to swings in the business cycle.
German takeover rules bar Bain and Cinven from amending their offer a second time. They could make a renewed bid but only with Stada’s approval within a year of the first attempt failing.
Lowering the acceptance hurdle even further under any new offer would complicate the buyers’ efforts to get debt financing for the deal because the German takeover code requires at least 75 percent ownership for full access to a target company’s cash.
Source: Reuters.com