All-Nighter in Stada's Spa Town Ends in Bain, Cinven Win

  • Wiedenfels told reporters ‘no one has had much sleep’
  • The $5.6 billion deal was codenamed Saturn and Antinori

What started almost a year ago with an activist investor shake-up ended in an overnight bidding whirlwind and, in the early hours of Monday, the sale of one of Europe’s last independent generic drug makers.

At 6:18 a.m. in Bad Vilbel, Germany, Stada Arzneimittel AG announced an agreement to sell itself to Bain Capital and Cinven for 5.3 billion euros ($5.6 billion). The deal marked the end of a dramatic and expensive bidding war that climaxed this weekend between the Bain-Cinven group and rival buyout consortium Advent International Corp. and Permira.

Both parties handed in bids by Friday’s midnight deadline, only to continue a back-and-forth over the weekend. Bain-Cinven offered 65 euros a share, closely followed by a new offer from Advent and Permira that forced the former to bump to 65.28 euros plus a 72 cent dividend, according to people familiar with the matter. That amount -- a 49 percent premium to the share price on Dec. 9, when takeover rumors surfaced -- sealed the deal.

“It was certainly a very intense and time-intensive negotiation, and if I look around the table here I see some tired eyes,” Chief Executive Officer Matthias Wiedenfels told reporters on a conference call Monday. “No one has had much sleep, but we were fit right up to the last second.”

All-Nighter

The price, as well as extensive job and site guarantees, won the backing of Stada’s management and supervisory board team, who were often at a loggerhead about the sale process in the past several months. Even if they agreed on the price, the chairman couldn’t resist a dig at the CEO following the all-nighter.

“I have to disagree this once, we don’t look that tired,” Carl-Ferdinand Oetker, who led the supervisory board, said on the same call. “But you are right, negotiations were long, but always with an eye on the result.”

The man from the namesake German food, shipping and banking empire, who was elected as Stada chairman in August, put his own stamp on the process. He created a committee to oversee the bidding process on Feb. 16, then hit the brakes on deal negotiations mid-March after deeming offers too low, before the company raised growth targets.

Activists Descend

Stada has been in turmoil since May 2016, when activist investor Active Ownership Capital Sarl bought a stake in the company and successfully campaigned to shake-up the board and overthrow a share-related structure that made it harder for someone to buy the company.

Then came the surprise departure of Chief Executive Officer Hartmut Retzlaff in June, after more than two decades at the helm, making Stada appear even more vulnerable amidst an industry-wide wave of consolidation.

Private equity firms and rival drugmakers had been circling Stada for years, seeing the potential to boost profit margins and operational efficiency and get access to Russian and German markets for over-the-counter and copycat drugs. What had been rumored for ages finally became real in February, when news leaked that Cinven and Advent had quietly made approaches. Advent had a head start after making the first proposal and getting an initial look at the books, people familiar with the discussions said at the time.

The news of the bids prompted a third bidder, Bain Capital, to make its own non-binding offer of 58 euros a share a few days later. Over the coming weeks, the private equity firms would team up -- Cinven with Bain and Advent would add Permira. In the end, the deal’s set to be one of the biggest-ever private equity takeovers of a public German company.

Code Name: Saturn

Cinven and Bain received praise for their teamwork from CEO Wiedenfels, who joked on Monday about how he observed the buyout firms sharing costs of everything from taxis to pizzas.

Stada’s supervisory board used the code name Antinori for the deal, after the famous Italian winemaker, people familiar with the talks said. Bain and Cinven chose a less earth-bound name, possibly anticipating the sky-high price they’d end up agreeing to pay: Saturn.

Stada’s new owners plan to grow the company by selling more of its brands abroad and making acquisitions, while also boosting efficiency and cutting costs, the people said.

The all-nighter will pay off for the deal’s bankers, who are set to earn as much as $55 million in fees, according to Freeman & Co. Stada worked with Perella Weinberg Partners LP and Deutsche Bank AG, while Evercore Partners Inc. advised the supervisory board. Bain and Cinven were advised by JPMorgan Chase & Co., Macquarie Group Ltd. and Rothschild & Co. as well as Barclays Plc, Citigroup Inc. and UBS Group AG and Nomura Holdings Inc. on financing.

With its share price rising to its highest on record after the early-morning announcement, no doubt there’ll be plenty of wine -- Antinori or otherwise -- flowing in the sleepy spa town outside of Frankfurt that is home to Stada.

— With assistance by Naomi Kresge, and Sarah Syed

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