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* Cinven, Bain offer total of 66 euros per share
* Beat out rival consortium comprising Advent and Permira
* Shares jump more than 10 pct, bid exceeds expectations
By Ludwig Burger and Alexander Hübner
FRANKFURT, April 10 Buyout groups Bain Capital
and Cinven won an auction for German drugmaker Stada
on Monday after a surprisingly large increase on a previous bid
valued the company at about 5.3 billion euros ($5.6 billion).
The private equity consortium is offering 65.28 euros per
share and a dividend of 0.72 euro per Stada share, the company
said in a statement on Monday, earning the backing of Stada
Bain and Cinven had been vying with a rival consortium
comprising Advent and Permira for control of generic drugmaker
Stada. Both suitors had previously made takeover offers at 58
euros per share, which valued the company at 4.7 billion euros
Stada said the improved offer valued it at 12.3 times its
expected 2017 earnings before interest, taxes, depreciation and
amortisation (EBITDA), above trading multiples among its peer
group of 9-11 times.
It carried a premium of 49 percent over the Dec. 9 share
price, before the first report of a takeover approach, it added.
Sources had said last week that final bids were due late on
Friday and would not go far above previous levels because it was
already seen as a stretch financially.
But Stada managed to stoke more competitive bidding between
the two sides over the weekend, resulting in further increases,
two people familiar with the matter told Reuters.
"I don't think that anyone just recently would have expected
us to get this far in such a thorough manner and so quickly,"
said Stada Chief Executive Matthias Wiedenfels.
Stada shares climbed 10.5 percent to 64.35 euros at 1130
"We believe this is very generous to Stada's shareholders
and recommend they accept the offer," said Jefferies analyst
James Vane-Tempest. "We had previously viewed a best case offer
at 65 euros."
MORE DEALS SOUGHT
Cinven and Bain will look into buying more healthcare
businesses to combine with Stada over the medium term, seeking
costs cuts that will make the high investment in Stada
worthwhile, two sources close to the consortium said.
Many buyout firms have been flush with cash after recent
rounds of divestments and amid cheap borrowing costs. Eying
stable healthcare businesses, financial investors also including
CVC had been working on offers for Stada for months.
Stada said it has signed an investor agreement which would
include protection provisions for employees. The company
employed more than 10,000 people as of the end of 2015.
Bain and Cinven have agreed to avoid forced redundancies for
four years in a move that exceeds staffing pledges incorporated
in current business plans, Stada said.
The planned takeover vindicates the strategy of activist
investor Active Ownership Capital (AOC), which built a stake of
about 7 percent in shares and options before May last year, when
the shares were trading at about only 30 euros.
Founded in 1895 in Dresden as a pharmacists' cooperative,
Stada's generic drug business has come under price pressure as
medical insurers in Germany, its largest market, are seeking
bulk procurement deals at low prices.
Stada, which also derives considerable parts of its revenues
from Russia and eastern Europe, is seeking to expand its
non-prescription consumer care business and has also made forays
into diagnostics kits and electronic cigarettes.
The offer documents will be published following approval by
Germany's financial regulator BaFin and the offer period would
likely end some time in summer, the company said.
Bain and Cinven said they were advised on the deal by JP
Morgan, Macquarie Capital and Rothschild.
Stada said that the buyers would fund about half of the deal
with 2.6 billion euros in equity, the remainder with debt.
Including undrawn facilities, the buyout will be backed with
just over 3 billion euros of debt financing, with drawn debt
amounting to 2.7 billion euros, banking sources said.
Barclays, Citigroup, Commerzbank, Jefferies, JP Morgan,
Nomura, Societe Generale and UBS are leading the debt financing,
which will include leveraged loans and high yield bonds
denominated in euros, the sources added.
They said that, given its size, the banks are likely to want
to launch syndication of the deal to include more debt investors
as quickly as possible.
($1 = 0.9450 euros)
(Additional reporting by Andreas Cremer in Berlin, Abinaya
Vijayaraghavan in Bengaluru, Claire Ruckin and Hannah Brenton in
London; Editing by Keith Weir)