With a deadline looming on Wednesday, only a third of shareholders in German pharma company Stada have accepted the takeover bid by Bain and Cinven.
The slow take-up means that there will have to be a late flurry of sign-ups if the private equity firms are to secure backing from at least 63% of Stada’s shareholders – and this will push the €4.1bn deal through.
Bain and Cinven narrowly failed to reach the required acceptance threshold for an earlier offer, mustering support from 65.52% of investors, just shy of the 67.5% needed to seal the deal, which was a reduction from an earlier 75% threshold. As of Friday around 34% of Stada’s shareholders had accepted, well short of the new, lower level and below the take-up rate at this point in the earlier deal.
A spokesman for the company told Reuters that the tender rate among retail investors – which own around a quarter of the company’s shares – “is much lower than we expected” adding: “it is now up to the hedge funds to make sure that the offer goes through.”
The proposed deal – which would be Europe’s largest private equity buyout for years – was backed by Stada’s executive and supervisory boards last month after Bain and Cinven negotiated an exemption from a 12-month stay on second offers which applies under financial regulations in Germany.
The revised offer was set at €66.25 per share, including a €0.72 dividend, which was fractionally up from the earlier unsuccessful €66 per share bid. That offer beat out a rival overture from Advent and Permira.
The drawn-out process has been challenging for Stada, with a string of senior executive departures including most recently chief executive Matthias Wiedenfels – who only took over at the helm of the Germany pharma company last June – and chief financial officer Helmut Kraft.
The company was pressured into a shake-up by activist investors who have claimed that Stada has under-performed compared to its peers in the market, eschewing the M&A that swept through the generic industry in the last few years, and needs to develop a new culture in order to succeed on the international stage.
Now, the board is concerned it may face further disruption if shareholders decide they are not inclined to accept the deal before the August 16 deadline. Labour union IG BCE has said it will resist any further takeover attempts if the current one fails, according to a City A.M. report.