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Bain joins bidding for Germany’s Stada with higher offer, sources: Reuters

German generic drugs company Stada (STAGn.DE) has received a new takeover approach which values it at 3.6 billion euros ($3.8 billion), raising the stakes in a three-way bidding war and pushing its shares to a new record.

Two people familiar with the matter identified the new bidder on Friday as buyout group Bain Capital. That followed Stada’s statement late on Thursday which disclosed a proposed price of 58 euros per share from an unnamed suitor.
Bain and Stada declined to comment.

A meeting of the Stada supervisory board has been arranged for Friday at short notice, a source close to the board said, with the bidding process expected to be on the agenda.

The company said earlier this week that buyout group Cinven had offered 56 euros per share, valuing it at about 100 million euros less than the latest approach.

Private equity firm Advent International had emerged as the second prospective bidder though a price has not been disclosed.

Advent is expected to submit a bid next week, two sources in the financial industry said. Advent declined comment.

Stada shares gained 1.9 percent to 57.29 euros at 1250 GMT, poised to close at a fresh record high, having advanced 15 percent so far this week.

Seeking investments in stable healthcare businesses, cash-rich buyout firms — also including Permira and CVC — have been working on offers for months and approached Stada about a deal, people familiar with the situation have told Reuters.

The tussle 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 around 30 euros apiece.

AOC at the time pushed for a management shakeup, calling for non-executive directors with more international experience.

In the wake of the investor’s campaign, Chief Executive Hartmut Retzlaff stepped down for health reasons last year after more than two decades at the helm, and long-serving Chairman Martin Abend was replaced by Carl Ferdinand Oetker, member of the family behind the unlisted German food group.

Founded in 1895 in Dresden as a pharmacists’ cooperative, Stada is seeking to expand its non-prescription consumer care business. Its generic drug business is under price pressure as medical insurers in Germany, its largest market, are seeking bulk procurement deals at low prices.

It has also suffered from a weak Russian rouble and British pound, two markets where it has considerable operations.

Monthly Manager Magazine earlier named Bain as the third suitor.