Advent Makes $1 Billion Bid for Dutch Pharmacy Chain Mediq
Advent International Corp. will offer to buy Dutch pharmacy chain Mediq NV (MEDIQ) for 775 million euros ($1 billion) in cash as it seeks to expand in the health-care distribution industry.
The Boston-based leveraged buyout fund plans to make a bid of 13.25 euros a share, 53 percent more than Mediq’s closing price on Sept. 21, the companies said in a statement today. Advent will pay for the takeover with debt and equity. Mediq shares rose as much as 52 percent in Amsterdam trading.
Mediq, founded in 1899 and based in Utrecht, owns 226 pharmacies in the Netherlands. It sells drugs, medical devices and related care services in 15 countries including Poland, the U.S., Germany and Sweden. Private ownership will enable Mediq to make acquisitions to expand globally, and provide easier access to financing, the company said.
“It makes sense for Mediq to operate in a private setting,” Richard Withagen, an Amsterdam-based analyst at SNS Securities, said in a note. “At the current offer, we believe Advent would obtain the direct and institutional business at an attractive price, without paying anything for the pharmacy operations.”
Mediq rose 49 percent to 12.87 euros at 2:20 p.m., and had the biggest intraday gain since the shares started trading in 1992.
Support for Bid
The management and supervisory boards of Mediq support the offer, the companies said. Templeton Investment Counsel and Silchester International Investors, representing 20.2 percent of shares in the Dutch company, have agreed to tender their stakes.
Silchester owned 15.3 percent as of Aug. 31, according to a regulatory filing. Mediq’s other largest shareholders include ING Groep NV, Delta Lloyd NV and Navitas BV, according to data compiled by Bloomberg.
“As far as we’re concerned the takeover is just a proposal and no done deal yet,” Jack Jonk, head of equities at Delta Lloyd’s asset management unit, said in an interview with Bloomberg News. Delta Lloyd owns about 14 percent of Mediq in total, he said.
“I’m satisfied with the interest in Mediq, which is proof of the company being undervalued enormously on the exchange,” said Jonk, adding the proposed takeover price “doesn’t mean the undervaluation has been resolved.”
Advent, whose other European health-care investments include Median Kliniken in Germany, made an indicative offer for Mediq in June, after the Dutch company started looking for buyers in the second half of last year, supervisory board Chairman Sjoerd van Keulen told reporters on a conference call today. No other party made a “tangible bid,” he told analysts today.
The offer price values Mediq at 6.98 times earnings before interest, tax, depreciation and amortization. That compares with a median of about 10 times Ebitda for retail drugstore deals in the past five years, according to data compiled by Bloomberg.
Excluding pharmacy operations, Advent’s offer values Mediq’s direct and institutional business at less than 10 times Ebitda, below the estimated median 11-times multiple that Mediq has paid for acquisitions in that business since 2010, SNS’s Withagen said.
The possibilities for a takeover by a strategic partner were limited, Van Keulen said. The company found only a couple of private-equity firms would be able to pay for the takeover. During its review, Advent came forward with its offer, he said.
The easier access to financing may support plans to expand internationally through takeovers, Mediq Chief Executive Officer Marc van Gelder said.
The firm has a “pipeline of acquisitions” and would mainly look in countries where it is already active, including Germany and the U.S., he told reporters today.
Deutsche Bank AG, Rabobank and BNP Paribas SA advised Advent on the deal, while ING Groep was financial adviser to Mediq and ABN Amro Group NV to its supervisory board. Freshfields Bruckhaus Deringer LLP and Allen & Overy LLP were the legal advisers for Advent and Mediq, respectively.
Advent is seeking 7 billion euros for its biggest fund, a person with knowledge of the matter said in February. Founded by Peter Brooke in 1984, the firm invests in industries such as health care, financial services, technology and retail. Recent purchases include Royal Bank of Scotland Group Plc’s credit-card payment processing unit jointly with Bain Capital LLC for 1.7 billion pounds ($2.75 billion) in 2010 and Francois-Charles Oberthur Fiduciaire SA’s smart-card unit last year.
Walgreen Co., the biggest U.S. drugstore operator, agreed on June 19 to buy 45 percent of Alliance Boots GmbH for $6.7 billion, valuing KKR & Co.’s stake in the company at more than twice its original equity investment. KKR bought a third of Alliance Boots, the largest drugstore chain in the U.K., in 2007.
Buyout firms such as Advent typically use loans secured on the targets they acquire to finance half to two thirds of the purchase price, and cash from their own funds for the rest. The firms seek to improve performance at the companies they acquire, or expand them, before selling them within about five years.