Goldshield faces battle for takeover

SHARES in Goldshield, the maker of appetite suppressant drug Appesat, jumped yesterday after the management of the pharmaceutical business confirmed it is working on a counter-bid to trump the 162m cash offer by bid vehicle AIT announced last week<br /><br />Goldshield&rsquo;s executive directors, chaired by former government drugs tsar Dr Keith Hellawell, confirmed they were trying to gatecrash the current offer and are close to securing equity and debt financing for their own bid. Goldshield&rsquo;s stock closed up by four per cent to 468p. AIT&rsquo;s offer is worth 440p a share. <br /><br />The management team, which is made up of executive directors Rakesh Patel, Kirti Patel, Ram Swamy and Ajay Patel own 3,533,065 Goldshield shares, approximately 9.62 per cent of the company. They yesterday urged shareholders not to accept the bid made by AIT.<br /><br />AIT, made up of the owners of Israel&rsquo;s Neopharm, the Fuhrer family, made a recommended offer for the firm, in conjunction with Goldshield&rsquo;s former chief executive Ajit Patel.<br /><br />Brewin Dolphin says the bid by AIT &ldquo;materially undervalues the group.&rdquo; The broker says its calculations suggest the firm may sell for 567p.<br /><br />Brewin said: &ldquo;The offer is too low in our view both on valuation grounds and notably, given the family&rsquo;s existing involvement with Neopharm in Israel, it does not adequately reflect the potential synergy savings that are likely to be extracted if the two businesses are to be combine.&rdquo;<br /><br />The management&rsquo;s counterbid comes despite the group&rsquo;s chairman initially recommending and accepting AIT&rsquo;s offer. Hellawell had said last week: &ldquo;We believe that this offers fair value for the long-term potential of the company and provides certainty of value for our shareholders.&rdquo;<br /><br />KEN WILLIAMSON ERNST&amp;YOUNG ADVISER TO MANAGEMENT TEAM<br />Goldshield&rsquo;s latest takeover tussle has seen a raft of advisers appointed to each side.<br /><br /><strong>Gleacher Shacklock</strong>, the boutique investment firm, has appointed Kieran Murphy and Angus Russell to be lead financial advisers to the drugs firm.<br /><br />Russell joined the firm in 2003 having previously worked for 11 years at Dresdner Kleinwort Wasserstein where he spent time in the Corporate Broking division. Murphy began his career as a civil servant at HM Treasury. He joined Kleinwort Benson, the predecessor of Dresdner Kleinwort, in 1988. He joined Gleacher Shacklock in early 2004.<br /><br />City banker Rothschild are acting as financial adviser to AIT, the newly incorporated company, formed for the purpose of implementing the Goldshield acquisition. AIT is ultimately owned by the Fuhrer Family, along with former Goldshield chief executive Ajit Patel. Hedley Goldberg and Julian Hudson are acting as Rothschild advisers for the AIT consortium.<br /><br />The management team, who are pursuing their own offer for the company have appointed <strong>Altium Capital</strong> as broker and <strong>Ernst &amp; Young </strong>as financial adviser.<br /><br />Tim Medak and Ken Williamson run the team for E&amp;Y, while Stephen Georgiadis and Tim Richardson have been appointed by Altium. Medak, a 20-year City veteran, previously co-head of Houlihan Lokey's European M&amp;A business, Managing Director of HSBC Investment Bank and after having spent a number of years at Lazard Brothers, joined E&amp;Y as a partner two years ago to build up the accountancy firm&rsquo;s public company advisory business. <br /><br />Richardson joined Altium in June 2002 after eight years in the corporate finance departments of Credit Lyonnais Securities and Robert W. Baird. Georgiadis joined Altium in 1985 and became a director in 1990. <br />