Class of 2020 | msprin@sas.upenn.edu
As of February 23rd, Boston-based Advent International Corporation has submitted a legally binding offer to purchase all STADA Arzneimittel Aktiengesellschaft shares to the management team of the German pharmaceutical company. The offer price will be at 58 Euros per share, totaling the offer at close to 4 billion Euros. This offer is in response to London headquartered private equity firm Cinven Partners LLP’s indication that it may offer 3.5 billion Euros for Stada, or 56 Euros per share. Cinven’s offer caused STADA’s share price to hit an alltime high, jumping from around 47 to 57 dollars with news of the takeover offer. Advent has stated that they are convinced the offer “comes with high transaction security and is in the best interest of the company, its shareholders, and its employees,” which now forces the management team based in Bad Vilbel, Germany to decide whether to move forward with Advent’s offer.
STADA is a pharmaceutical company which specializes in production of generic and over-the-counter drugs. According to their website, STADA is present in more than 30 countries with about 50 sales companies. Their branded products such as Grippostad, a leading cold medicine, and Ladival, a sunscreen brand, are top selling items in their product categories. STADA reported 2014 revenue of €2.06 billion, with a net income of €64.6 million. The offer comes at a time where STADA’s share price of $57.15, as of March 1st, is very close to its 52-week high of 58.01, largely due to recent takeover offers from Cinven and Advent that caused the share price to surge two weeks ago.
Advent’s offer of 58 Euros per share places close to a 66 percent premium compared to the share price on March 31st, 2016, which was before the share purchases of activist investors were made public. The offer also implies a premium of around 26 percent when comparing the offer price to the calculated volume-weighted three-month average share price before Advent first approached STADA with an indicative proposal on February 1, 2017, according to the firm. Moving forward, Advent hopes the transaction will close after the dividend payment for the business year 2016. With this timing, investors would benefit from the expected dividend payment in addition to the bonus of the new cash offer price.
Advent has previously held an active position in Germany and in the pharmaceutical sector, which has prepared the firm for another potential deal with a European pharmaceutical company. Advent has been active in Germany for over 25 years, and has completed more than 35 investments in the global pharmaceutical space. Advent’s history in the sector has spanned from pharmaceuticals (Viatris – formerly Asta Medica, Grupo Biotoscana, LKM, Terapia, Tropon) to pharmaceutical distribution (Mediq, Genoa) to pharmaceutical outsourcing in sales and clinical research (inVentiv Health). This experience will surely give Advent the operational expertise in developing STADA’s plan for sustained growth across product lines.
Assuming Advent is able to close the deal with STADA around their expected response date, the firm hopes to boost STADA’s growth through investments in new productions, line extensions and acquisitions. The Boston firm claims they have no intention to sell off significant parts of the business or to split the company. Instead, Advent hopes to put in place a long-term strategy for STADA that focuses on developing new growth areas and accelerating its international expansion. The focus of the growth will be placed in areas such as Germany, Italy, Spain, the UK, Belgium and Russia, which are all geographies where STADA already holds a leading position. Advent has also said they identify growth areas for the pharmaceutical company in Asia and Latin America. In order to assist in STADA fulfilling their growth trajectory, Advent can access additional capital for future acquisitions, while also utilizing the firm’s operational and sector expertise in order to support management in the execution of Advent’s proposed plan.