BASF SE, which raised its bid for Pronova BioPharma ASA three days before the offer expired, won almost 98 percent support from the Norwegian drug-ingredient maker’s shareholders, enough for the acquisition to go through.
BASF is setting up a compulsory acquisition process to acquire the remaining shares in a so-called squeeze out and expects to finalize the deal within the next week, the Ludwigshafen, Germany-based company said today. BASF raised its offer to 13.50 kroner a share on Jan. 15, valuing Pronova at almost 5 billion kroner ($900 million) after minority shareholders balked at a previous 12.50 kroner a share bid.
The deal marks an end to an eight-week battle on the valuation of Pronova, which makes a top-purity fatty acid used in blockbuster heart drugs such as GlaxoSmithKline Plc’s Lovaza. Adding the Lysaker-based company helps BASF Chief Executive Officer Kurt Bock boost his share in nutrition and health, a market estimated to grow to 81 billion euros ($108 billion) by 2015 and sought after by rivals such as Royal DSM NV and Croda International Plc.
“BASF raising the price definitely eased the whole process,” said Ulle Woerner, an analyst at Landesbank Baden-Wuerttemberg, who rates BASF shares buy. “I don’t know if the Pronova shareholders would have gotten much more.”
BASF’s offer values Pronova at 6.2 times earnings before interest, tax, depreciation and amortization, compared with 9 times Ebitda that DSM paid for both Ocean Nutrition Canada and food-additive maker Fortitech.
Shares of BASF gained as much as 1.3 percent to 74.11 euros in Frankfurt trading and were up 0.7 percent as of 9:44 a.m. local time. Pronova stock gained as much as 0.8 percent to 13.45 kroner in Olso.
Odin Forvaltning AS, which owned 4.7 percent of Pronova, and Nykredit Asset Management, with about 1 percent, were among investors that rejected BASF’s first bid. Even though the second offer isn’t as much as it had sought, Nykredit accepted the bid to mitigate the risk of holding onto the shares, said Rolf Solgard, a portfolio manager at the Danish bank.
The offer “represents the full and fair value for all shareholders, while providing the best strategic option for the further development of Pronova’s business,” BASF said today.
All Pronova shareholders except Herkules Private Equity, which held half of the stock, will get the higher price, BASF said. That means that the German company, which is paying in cash for Pronova, will have an outlay of about 3.9 billion kroner.