March 28, 2017
By Mark Terry, BioSpace.com Breaking News Staff
BERLIN – There’s a lot of bidding for Stada Arzneimittel AG and now some apparent spying.
The company has been the target of multiple takeover attempts. On February 17, the company indicated an unidentified bidder was potentially offering $61.50 per share. Two other bidders included private equity firm Cinven Partners LLP, which potentially was offering $60.86, and Advent International, which had made an undisclosed offer. The third bidder has since been identified as Bain Capital.
Now the story has taken a strange turn. According to Germany’s Manager Magazin, Stada’s chief executive officer, Matthias Wiedenfels, discovered a bugging device in his car. He also received anonymous letters and photographs showing him in private and confidential business situations.
The magazine didn’t cite sources, but did say the incidents occurred in the second half of 2016. Wiedenfels took over as chief executive in the summer.
At this point, there’s no indication whether the bugging devices are related to the takeover attempts.
According to Reuters, “Investors including Active Ownership Capital (AOC) have criticized Stada’s management through a high-pressure campaign, which culminated in long-serving CEO Hartmut Retzlaff’s resignation last year. Retzlaff was replaced by Wiedenfels in June 2016.”
In February, Stada invited Cinven Partners and Advent International to begin negotiations. All the coverage about a potential bidding war drove Stada shares up as much as 14 percent. Sources note that these apparently inflated prices, as well as opposition from supervisory board chairman Carl Ferdinand Oetker, have slowed progress toward a deal.
In a statement, Stada said its executive board “started open-minded talks to allow the interested parties to explain their strategic concepts and evaluate further value-enhancing potential with regards to the potential offer price.”
A source told Reuters in February that the company’s supervisory board, which had been opposed to a sale, started to consider bids, even though a sale would likely mean the company would be broken up. Stada was founded in 1895 as a pharmacists’ cooperative. It is attempting to expand its non-prescription consumer care business. Its generic drug business is struggling with pricing pressure as German insurers push for low-price bulk procurement deals.
The sources indicate that a new owner will likely break up the company into two units, one for its consumer business, the other for generics. However, Reuters notes that this would be “a challenge because Stada is largely managed along regional or country divisions which combine generics and consumer care lines of business.”
James Vane-Tempest, an analyst with Jefferies, said, “Although Stada does have a decent branded products business, a strong position in Russia and a pan European distribution platform, in our view it had been a big ask to command a significant premium on the rest of the business, which is the larger segment.” So, in his estimate, Cinven’s 56 euros per share deal was fair given Stada’s high net debt levels.
Neither Stada nor public prosecutors in the city of Giessen, Germany, commented on the accusations that Wiedenfels’ car was bugged.
