Private equity giants give in to activist investor Elliott and up their bid for drugmaker Stada


Paul Singer heads up activist investor Elliott (Source: Getty)

Just as the battle for German generic drugmaker Stada seemed to be won, private equity firms Bain Capital and Cinven have been forced by activist investor Elliott to up their offer.

The pair have agreed to meet Elliott's demand of €74.40 per share, a huge hike from the €66.25 bid which won them control of the company last month.

Bain and Cinven said in a statement late last night that they were “convinced that the fair value of Stada shares is below the price required by Elliott”. However their words rang hollow as they agreed they would propose the increased bid to the management and supervisory boards.

Stada's share price climbed in morning trading, and at the time of writing was up 1.86 per cent at €80.98.

Read more:  Private equity players launch sweetened bid for German drugmaker Stada

The private equity firms won support for their €66.25 bid last month from almost 64 per cent of shareholders, valuing the company at €5.3bn and making the deal the largest ever private equity-funded takeover of a German listed company.

They have since been trying to take their support up to 75 per cent of shareholders, which would mean the pair could tap into Stada's cash flow and service their debt.

But Elliott demanded more for its stake, which recently stood at 13.3 per cent of the total shareholding or 15.2 per cent when taking stock options into account.

The bidders had already upped their offer by €0.25, after an initial €66 per share offer failed to win the support of enough shareholders.

Bain and Cinven will likely be keen for the uncertainty over their bid to end, as they have immediately got stuck in to making change at the pharmaceutical company. Last week they announced they would recommend Claudio Albrecht as new chief executive and Mark Keatley as new chief financial officer of Stada, after current chief executive Engelbert Willink and chief financial officer Bernhard Düttmann said they would step down.

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