HANDELSBLATT EXCLUSIVE

Stada Chairman Won’t Rule Out Strategic Investor Bid

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Stada is becoming a hot commodity. Picture source: Reuters

If the latest reports are to be believed, then the race to acquire Stada is starting to heat up.

The Chinese drugmaker Shanghai Fosun Pharma plans to enter the fray and make a bid for the Hesse-based drugmaker, sources told Reuters news agency. A bid from China would create a three-way competition for the mid-cap drugmaker, setting Stada up for a bidding war.

But Stada’s supervisory board chairman, Carl Ferdinand Oetker, couldn’t confirm to Handelsblatt on Thursday that Fosun intended to make an offer, though he also wouldn’t rule out a bid by a strategic investor.

“I’ve have also only read about it up until now,” Mr. Oetker told Handelsblatt. “We’ll see whether or not there will be other bidders. It can never be ruled out that a strategic investor comes at the end of such a process and makes an interesting offer. That’s also happened with finance investors.”

Two sources had told Reuters that Fosun Pharma is in discussions with the private equity firm CVC Capital Partners, headquartered in Luxembourg, to make a joint offer for Stada. Fosun could, however, decide to go at it alone in the end, the sources said.

A spokeswoman, talking to Reuters, had said Fosun has nothing to make public at this time.

“Those interested have highlighted the strengths of our company and have confirmed the current structure.”

Carl Ferdinand Oetker, Stada Supervisory Board Chairman

Several investors have already expressed interest in Stada. The British investor Cinven has floated an offer of €3.5 billion ($3.7 billion) and Advent International, a Boston-based private equity firm, has also shown interest.

The competitors have formed private equity consortia for the bidding process. Cinven has partnered with Bain Capital while Advent has partnered with Permira

Mr. Oetker said that although Cinven and Advent have expressed serious interest, Stada has not received any binding offers.

“It’s too early in the process,” Mr. Oetker said. “The supervisory and executive boards set up a structured process two weeks ago with the goal of handling all the interested parties equally. Right now the investors are still reviewing the documents.”

Mr. Oetker did say that none of the investors have expressed any intention to break up Stada after an acquisition.

“So far no investor has come with this idea,” Mr. Oetker said. “Those interested have highlighted the strengths of our company and have confirmed the current structure. Stada has a lot of potential and all the investors have recognized that.”

The maker of cold medicine Grippostand and Ladival sun lotion has undergone a pitched battle between management and activists investors over the company’s direction.

In May 2016, Active Ownership Capital bought a 5-percent stake in Stada and pushed for a reorganization of the non-executive supervisory board due to dissatisfaction with the company’s performance.

AOC believes Stada, with revenues of around €2.1 billion and net profits of €110 million, falls short of its potential.

Guy Wyser-Pratte, an activist U.S. investor, bought a 3-percent stake in June and has also pushed for changes at the top. In August, long-serving chief executive Hartmut Retzlaff, who had been on sick leave, officially stepped down and Matthias Wiedenfels took his place.

Mr. Wiedenfels, however, is now in the crosshairs of Mr. Wyser-Pratte, who has said Stada needs a change of management.

“Wiedenfels will ask for a nice retirement package, and he will probably get one,” Mr. Wyser-Pratte told Handelsbatt. “But then it’s bye-bye. Stada has many very qualified managers in its rows. But the guys at the top are not needed.”

 

Sönke Iwersen leads Handelsblatt’s team of investigative reporters. Maike Telgheder is an editor at Handelsblatt, covering the health economy, pharmaceutical companies and chemistry. Spencer Kimball is an editor with Handelsblatt Global. To contact the authors: iwersen@handelsblatt.comtelgheder@handelsblatt.com,   s.kimball@extern.vhb.de.

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