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Germany’s financial regulator, BaFin, has cleared the way for Bain Capital and Cinven to return with a fresh and higher offer for Stada, the generic drugmaker, in what is set to be Europe’s largest buyout in four years.
The private equity consortium bidding for the maker of copycat drugs such as generic Viagra has secured an exemption from a one-year exclusion period, meaning it can submit a renewed voluntary public takeover approach.
The approval of an exemption came as Bain and Cinven announced they had increased their bid by €0.25 to €66.25 a share, €16m above the first offer and valuing the group at €4.124bn, according to the company. Stada, whose chief executive and head of finance stepped down with immediate effect last week, said it supported the revised offer.
The acceptance threshold for the new bid has been lowered to 63 per cent from an initial 75 per cent bar, and the acceptance period has been cut to four weeks.
Late last month, Bain and Cinven’s initial bid failed after they were unable to secure sufficient backing from Stada shareholders.
The buyout groups will now be able to tender a renewed voluntary public offer for Stada without having to adhere to the one-year exclusion period.
“We believe that enabling Bain Capital and Cinven to submit an improved offer is in the best interest of the company and our shareholders,” said Engelbert Coster Tjeenk Willink, chairman of Stada’s executive board.
Stada’s shares were 1.2 per cent in early afternoon trading at €65.28.
Bain and Cinven had received acceptances from 65.52 per cent of shareholders for their original offer, just below their 67.5 per cent target.
The initial bid failed to due factors including some hedge funds refusing to tender their shares in the hope of forcing the bidders to pay a higher price.
Bain and Cinven have now received irrevocable acceptances from those investors, including some of the funds that held back from the previous offer.
The initial offer represented a 49 per cent premium to the company’s undisturbed share price and had the approval of Stada’s board and management.
Bain and Cinven fought off bids from another private equity consortium comprising Advent International and Permira.
Dealmaking teams at Permira and Advent had been tempted to submit another bid following the collapse of the initial auction, a person familiar with the process said. However, they were “unlikely” to return with a fresh bid because of the hurdles it has to overcome, the person added.
Private equity groups have been under mounting pressure to deploy their capital. During the first half of 2016 they spent more than $53bn on public companies, according to PitchBook. The sum represented the highest amount spent since 2007 and an 80 per cent increase in total capital invested in public companies from the same period a year earlier.
The difficulty in finding assets to buy in the private market and fierce competition from investors such as pension funds and sovereign wealth funds are pushing buyout groups to deploy larger amounts of capital for publicly listed companies.