Servier to Buy Rest of Egis, Delist It From Waning BourseMarton Eder and Edith Balazs
French drugmaker Les Laboratoires Servier offered to buy the shares of Hungary’s Egis Nyrt. it doesn’t own for 107 billion forint ($483 million) and delist it from a local bourse already hobbled by dwindling volumes.
Servier, which already controls 51 percent of the Budapest-based pharmaceutical company, offered 28,000 forint per share for the rest, a 33 percent premium over yesterday’s closing price, according to a statement posted on the Budapest bourse’s website today. Trading in Egis shares was suspended.
Egis, with the fifth-largest market capitalization on the exchange, will be pulled off the Budapest Stock Exchange because it doesn’t need equity financing, said Pascal Touchon, Servier’s director of business development. The bourse has lost almost half its average daily volume in the past two years after private pension funds were nationalized, competition from other bourses rose and seven companies were delisted since 2011.
“There could be sad consequences with regard to the exchange as it could be losing one of its blue chips,” analysts at Erste Befektetesi Zrt., a local unit of Erste Group Bank AG said in an e-mailed note to investors. Egis has a 5.24 percent weighting in the 13-member benchmark BUX index.
On average 8.9 billion forint in shares traded hands each day this year in Budapest, compared with 15.2 billion forint a day on average in 2011, according to data published on the stock exchange’s website.
Egis shares fell 1 percent to 21,050 forint yesterday, pushing this quarter’s decline to 3.9 percent. That was 8.75 times 12-month earnings per share, below an average 26.23 ratio for 10 Eastern European pharmaceutical shares tracked by Bloomberg.
“The offer seems generous on the face of it. At the same time, Egis was one of the cheapest stocks on the market,” Attila Vago, a Budapest-based analyst at Concorde Ertekpapir Zrt., said by phone. “It was trading at a discount because there was a strategic owner, which made it less transparent. The shareholders didn’t have access to the huge cash stock, and liquidity was lower.”
Egis, which is active in central and eastern Europe including Russia, has increasingly relied on exports for sales growth as Hungary’s government curbed drug spending to rein in the budget deficit. The company posted a net income of 2.9 billion forint in the quarter ended in June, below the 4.1 billion-forint estimate in a Bloomberg survey.
Egis’s board of directors will discuss the offer on Oct. 1, state news service MTI reported, citing Chief Executive Officer Istvan Hodasz. The offer is pending approval by the Hungarian Financial Supervisory Authority. KBC Securities in Budapest, a unit of KBC Groep NV, and Centerview Partners LLC are advising Servier.
“The offer price is final and Servier will not increase the price outlined in the public offer,” Servier’s Touchon said, adding that the company wasn’t planning any post-bids after the acceptance period ends, regardless of the original bid’s outcome.
“Even if some minorities dissent, Egis shares are likely to be delisted,” James Vane-Tempest, a London-based equity analyst at Jefferies, said in an e-mailed note. Servier can pass a motion to delist the shares with 75 percent of shareholders’ votes, he said.