Pharma Takeover

Investors Suspicious of Stada Tactics

  • Why it matters

    Why it matters

    Stada’s share price could collapse if neither of the two bids materializes.

  • Facts


    • Two private-equity takeover consortia have announced bids of €58.00 a share, or around €3.6 billion ($3.9 billion) in total.
    • Stada’s supervisory board chairman, Carl Ferdinand Oetker, wants to drive the price up to at least €70.00 a share, financial sources told Handelsblatt.
    • Stada’s share price dropped by about 1 percent on Friday and another 0.6 percent on Monday, trading at €55.77.
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Pharmabranche sucht Rezepte für die Zukunft
Stada management says the company can boost earnings in both the generic and the branded sectors. Source: Frank May/DPA

Pharmaceuticals company Stada is worth more than the share price indicates, if one is to believe the message the board sent out on Friday when it raised medium-term forecasts.

Chief executive Matthias Wiedenfels wants to boost its operatning profit 45 percent by 2019, rather than around a quarter as previously announced. Mr. Wiedenfels told Handelsblatt the new profit guidance “shows the company is strong, has great potential, and that we are taking the right steps.”

On the markets, the improved forecast looks like a retrospective justification for the Stada supervisory board’s decision, announced a day earlier, to put off planned talks with two prospective bidding consortia.

Both groups of private equity firms, Advent and Permira on one hand and Cinven and Bain on the other, have announced bids of €58.00 ($62.30) a share, or around €3.6 billion ($3.9 billion) in total. According to the Stada board, these offers do not reflect the firm’s true value. But many suspect Stada is deliberately driving its share price up.

Stada boss Mr. Wiedenfels says it is pure coincidence the prognosis was raised just a day after the talks were cancelled. “We found that we have made progress with the reorganization at Stada much more rapidly than expected,” he told Handelsblatt, “and we’ve identified further growth opportunities. Once we had taken that into account in our planning, we also had to communicate it ad hoc.”

If the Stada chief hoped to drive up the company’s value, he would have been disappointed on Friday. The share price dropped by about 1 percent, to €56.13 and on Monday afternoon at 2:49 P.M. it was down another 0.6 percent at €55.78.

Resentment is now spreading among investors, who fear Stada is employing delay tactics and preparing to reject the offers.

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