Photographer: Krisztian Bocsi/Bloomberg

Stada Said to Plan Hike to Profit Guidance to Increase Bids

Updated on
  • Management canceled presentations to bidders this week
  • Board said the current bids don’t reflect Stada’s value

Stada Arzneimittel AG’s Chairman Carl-Ferdinand Oetker, navigating a bidding war for the German drug company, hit the brakes on deal negotiations this week and is driving management to cut costs and raise profit guidance as he maneuvers for higher offers, people familiar with the matter said.

Oetker has urged his top executives to consider more aggressive steps to improve performance, people familiar with the matter said, asking not to be identified because the deliberations are private. The company could increase profit guidance when it reports annual results next Thursday, weeks after it said this year’s earnings may climb as much as 11 percent to 450 million euros ($483 million), they said.

Stada’s management also canceled planned presentations to the bidding groups late on Tuesday after a committee of the company’s supervisory board, led by Oetker, refused to approve additional due diligence, the people said, asking not to be identified because the deliberations are private. Stada confirmed that the sessions had been postponed in a statement on Thursday.

“The executive board and the supervisory board mutually agree that the indicative bids do not yet reflect the fundamental value,” the company said. Stada “wants to provide the bidders the opportunity to increase their offers.”

Oetker, heir to the eponymous pudding and baking powder company, is taking an unusually assertive role for a German chairman, who is generally limited to supervising management instead of engaging in day-to-day business. The delay is irritating firms that have already made offers of 58 euros a share and planned to travel to the company’s headquarters in Bad Vilbel for talks, and is creating concerns that the back-and-forth will drive prices to unrealistic levels, the people said.

Competing Bids

The move buys time for Shanghai Pharmaceuticals Holding Co., which is deciding whether to join forces with private equity firm CVC Capital Partners, the people said. The companies haven’t been able to make a final decision because the Chinese government needs to approve Shanghai Pharma’s participation, the people said. That decision could be made in the coming weeks, they said.

In the statement, Stada denied the delays were “aimed to make another committee composed of a private equity company and a strategic investor enter the process.”

CVC and Shanghai Pharma would be competing against other investor groups including a consortium of Advent International Corp. and Permira as well as a team comprising of Cinven Ltd. and Bain Capital, people familiar with the matter said previously. Singapore’s GIC Pte is also interested in making an offer as a co-investor with Advent, the people said.

Representatives for Stada, Cinven, Permira and CVC declined to comment. Bain and Advent didn’t immediately respond to requests. A spokeswoman for Shanghai Pharma said the company had no further comment beyond the company’s last statement, when it said it had not expressed any formal intent to buy Stada.

Advent’s Offer

Stada let a deadline for a 3.61 billion-euro offer from Advent pass last month to keep the process open for other bidders. Private equity firms, sitting on record amounts of undeployed capital, are flocking to assets like Stada amid a shortage of deals.

The supervisory board established a five-member committee in February, lead by Oetker, to help executives “protect the interests of the company as efficiently as possible” and ensure a “close exchange of information.”

Stada shares fell 0.3 percent to close at 56.84 euros at in Frankfurt trading on Thursday. The stock has gained 16 percent this year, giving it a market value of about 3.54 billion euros.