Bain, Cinven Said to Seek Investor Commitments for New Stada Bid

  • Buyout firms want key shareholders to pledge to sell shares
  • Private equity companies are weighing a new offer next month

Private equity firms Bain Capital and Cinven are planning to seek commitments from Stada Arzneimittel AG’s largest investors that they will tender their shares to the buyout firms if they renew their 5.3 billion-euro ($6 billion) bid for the generics drugmaker, people familiar with the matter said.

The buyout firms could make a new offer as soon as next month, the people said, asking not to be identified because the discussions are private. A number of investors have approached the private equity duo, asking them to re-approach the Bad Vilbel, Germany-based Stada after shareholders failed to sell enough shares for the last offer to go through, the people said.

Bain and Cinven said on Monday that they’d received 65.5 percent of Stada shares, just missing the 67.5 percent threshold. The firms could reach out to Stada’s top 25 shareholders as soon as Wednesday to seek pledges that the investors will tender their shares, the people said.

Depending on the response from those shareholders, Bain and Cinven could ask Stada’s management and German financial regulator BaFin for approval to launch a new bid in the coming weeks, though no final decision has been made, they said. Representatives for Bain and Cinven declined to comment.

The deal -- which commanded a 49 percent premium fueled by a private equity bidding war for one of the last large, independent generic drugmakers in Europe -- has been complicated by Stada’s complex shareholder structure.

Shareholder Holdouts

About 16 percent of retail investors refused to sell their shares in the first offer, an unusually high amount, and index-tracking funds, controlling another 10 percent, only tender shares after the bid is successful and enters an extended offer period, people familiar with the matter said. That put more than a quarter of Stada’s shares out of reach as the private equity buyers attempted to reach thresholds of 75 percent and then 67.5 percent.

In addition, some hedge funds held back from selling shares because they were hoping to fetch a higher price for their stock once Bain and Cinven’s bid was successful, the people said. Many of them got bruised when Stada shares tumbled Tuesday following news that the offer had failed.

Buyout firms Advent International Corp. and Permira, which had unsuccessfully bid for the German drugmaker during the auction before losing out, are also speaking to advisers about whether they should try a fresh bid, though no offer is imminent, people familiar with the matter had said.

Advent’s group had looked at making a counter offer even after the agreement with Bain and Cinven was announced, people familiar with the matter said in May. Labor union IG BCE in said at the time it was “very irritated” by news about potential counter bids for Stada. “All suitors had enough time to consider an offer,” IG BCE’s Ralf Erkens said.

Still, many remain skeptical such a move can come quickly or at similar terms. It’s unlikely the group would be willing to offer more than 66 euros a share now, said Daniel Wendorff, an analyst at Commerzbank AG.

— With assistance by Sarah Syed

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