Bain, Cinven to take over Stada in €5.3bn deal

The Frankfurt-listed pharmaceutical company has accepted the pair’s offer of €66 a share.

Frankfurt-listed Stada, Germany’s largest maker of generic drugs, has accepted an offer from Bain Capital Private Equity and Cinven to acquire the business in a €5.3 billion deal.

The firms have offered €66 per share – which includes a cash consideration of €65.28 plus a dividend of €0.72 per share – for all outstanding share of the company, representing a premium of 48.9 percent over the closing price of 9 December 2016, the last day of trading prior to the first rumours about a potential takeover.

The offer represents a total equity value of about €4.1 billion.

The completion of the takeover will be subject to a minimum acceptance threshold of at least 75 percent of all Stada shares and antitrust clearances.

In February, Stada confirmed it had received a takeover bid from Cinven of €56 per share. Advent International also made a bid for the company of €58 per share plus the 2016 dividend of €0.72 per share.

“Over the past months, we have carried out a structured bidding process and achieved a significant improvement in the bids through joint, trustful negotiations with the bidding consortia. We have thus created approximately €750 million in additional value for our shareholders since the beginning of the process,” Matthias Wiedenfels, chief executive officer of Stada said in a statement on Monday

“After a careful review, the executive board and supervisory board of Stada reached the conclusion that the transaction offer of Bain Capital and Cinven was in the company's best interest. Subject to a careful review of the offer document to be published by the bidder, the executive board and supervisory board of Stada are expected to recommend to the shareholders to accept the offer submitted by Bain Capital and Cinven.”

As part of the deal, Bain and Cinven have agreed to help Stada with its growth strategy, including add-on acquisitions, expansion into new markets and new product development. In a statement, the two firms said implementing the growth strategy will entail “considerable investment”.

“Our proposal reflects the fact that Stada is a well-positioned healthcare company at a critical juncture of its development,” Dwight Poler and Michael Siefke, managing directors at Bain Capital, said in the statement.

“The company has already made progress following its strategic realignment in the past year, but we are conscious that significant time and resources are required to unlock Stada’s full potential,” Cinven partners Supraj Rajagopalan and Bruno Schick said in the statement.

“Once the offer has been completed, we look forward to a close collaboration with all stakeholders of STADA to take the group to the next level.”

In a press release confirming its support of the bid, Stada said that a contractual agreement had been reached with the two private equity firms to ensure existing works and wage agreements would be upheld, the location of the company’s headquarters and key business units will remain unchanged, and to “broadly refrain from business-related layoffs further than those already incorporated in the current business plans for four years”.

This is the first time Cinven and Bain Capital have teamed up together on a deal. However, both firms have participated in large club deals in the last year. In October Cinven and CVC Capital Partners clubbed together to acquire UK credit card business NewDay, and in the same month joined with Permira and Mid Europa partners to acquire Polish online marketplace Allegro Group.

In January Bain Capital joined with Advent International, a long-time partner, to acquire German payments group Concardis. The deal was the fourth time the two had acquired a payments processing business together and the eighth time overall they had combined on a deal, as reported by Private Equity International.