Stada weighs two takeover offers
• Drug maker’s shares jump after private equity firm names its price
The prospect of a bidding war drove shares in Stada 14% higher on Monday after the German drug maker said it was weighing two takeover approaches including one from private equity firm Cinven Partners, which valued it at almost €3.5bn.
Buyout companies Advent, Permira and CVC had been working on offers for months and approached Stada about a deal, people familiar with the situation told Reuters. It remains unclear which of them Stada was referring to as the second suitor in its statement.
Cinven had been preparing a joint bid with Poland’s unlisted Polpharma to combine the two businesses and cut costs. The buyout firm decided to go it alone when the venture proved too complicated, a person familiar with the matter said.
Polpharma was not immediately available for comment.
Cinven was offering a price of €56 per Stada share, the German company said.
The shares had jumped 14% to €56.70 by 12.15pm in Frankfurt on Monday.
The approaches vindicate the strategy of activist investor Active Ownership Capital, which built a stake of about 7% in shares and options before May 2016, when the share was trading at about €30.
Active Ownership Capital was set up by former investment bankers Florian Schuhbauer and Klaus Roehrig. Stada marked the firm’s first major investment.
The drug maker said it was still weighing its options, saying it was “not possible to foresee whether a takeover offer from Cinven or the other potential bidder will materialise”.
The buyout firms declined to comment and Stada would not elaborate on its statement.
Under former CEO Hartmut Retzlaff, Stada steered clear of major merger deals when the generic drug industry began consolidating to cut costs, driven by larger players including Teva and Allergan.
Retzlaff stepped down in August 2016 after more than two decades at the helm.
A source close to one of the bidders said that the supervisory board, which previously opposed a sale, had become more open to considering bids, even though this was likely to result in a break-up of Stada.
Founded in 1895 in Dresden as a pharmacists’ co-operative, Stada is seeking to expand its nonprescription consumer care business. Its generic drug business is under price pressure as medical insurers in Germany, its largest market, seek bulk procurement deals at low prices.
Sources familiar with potential bidders say a new owner is likely to separate the two businesses. That will present a challenge because Stada is largely managed along regional and country divisions that combine generics and consumer care lines of business.
Active Ownership Capital had been pushing for personnel changes at Stada. In August, the investor succeeded in convincing shareholders to remove the supervisory board chairman but failed to install its candidate in the post.
Stada’s supervisory board of nonexecutive directors, led since August by Carl Ferdinand Oetker, a member of the eponymous German family-owned baking goods and food group, had previously been unwilling to engage in negotiations with potential bidders, several people familiar with the matter have told Reuters.