Germany's BASF hikes offer for Pronova as approval deadline looms

15 January 2013 14:48  [Source: ICIS news]

LONDON (ICIS)--BASF has increased its offer for Norway-based pharmaceutical company Pronova BioPharma days before its takeover offer expires, the Germany-based chemicals company said on Tuesday.

The company has increased its offer for the company to Norwegian kroner (NKr) 13.50 (€1.83, $2.45) per share from its original bid price of NKr12.50 per share, representing a total enterprise value of Nkr5bn.

For a deal to be approved, BASF needs to secure the approval of 90% of Pronova’s shareholders before 18 January.

The offer deadline had originally been set to expire on 19 December, but was extended – an occurrence that will not be repeated if shareholder approval fails to hit the required threshold this time, according to BASF.

“Following a comprehensive due diligence review, and taking into account the opportunities and foreseeable risks in Pronova’s business, this increased offer is our last, best and final offer,” said Michael Heinz, BASF’s executive board member responsible for performance products.

The company claims to have received acceptance from stockholders representing 70% of Pronova’s share capital, of which 60% is secured in the form of irrevocable pre-acceptance commitments.

Majority shareholder Herkules Capital – which is not entitled to the sweetened offer for its 50% stake, according to BASF – has committed to the deal, as have investment firms Kistefos and Kistefos Investment, which indirectly control a 9.1% stake in Pronova.

Pronova’s management team and board, which holds 0.3% of the company, have also pledged their shares, the company added.

However, the takeover has been threatened by the opposition of some shareholders, who believe that the price offered for the company is too low, representing a multiple of earnings before interest, tax, depreciation and amortisation (EBITDA) far below the average for pharmaceutical industry mergers and acquisitions.

Rolf Solgard, chief portfolio manager of Pronova shareholder Nykredit Asset Management, told ICIS last week: “I think a fair standalone price is much higher than what you had in the share price before the bid. A bid premium of 4% compared to the share price the day before the bid and an EBITDA multiple of 5.7x is far below what we have seen for acquisitions in the sector.

“We are hearing a lot of shareholders have the same opinion as ourselves,” he added.

($1 = €0.75, $1 =NKr5.51, €1 = NKr7.37)

By: Tom Brown
+44 208 652 3214

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