CVC, GBL launch €10.7 billion bid for Italian drugmaker Recordati
Main Bid Details and Market Context
By Elvira Pollina and Giulia Segreti
MILAN, May 22 (Reuters) - Private equity firm CVC Capital Partners and Belgian investment group Groupe Bruxelles Lambert launched a €10.7 billion ($12.4 billion) cash bid for Recordati on Friday, aiming to take the Italian drugmaker private.
Recent Activity in Italy's Pharmaceutical Sector
Italy's fragmented pharmaceutical sector has seen a flurry of dealmaking in recent months as companies seek to scale up, with Angelini announcing a $4.1 billion acquisition of U.S.-listed Catalyst Pharmaceuticals and Chiesi buying U.S.-based KalVista Pharmaceuticals for about $2 billion.
CVC's Stake and Offer Details
CVC, which has since 2018 controlled a vehicle holding a 46.8% stake in Recordati, submitted a non-binding expression of interest at the end of March for all of the company’s shares, with the aim of delisting it.
The preliminary offer was subject to a number of conditions, including the identification of partners to support the bid, Recordati said at that time.
Strategic Rationale for the Bid
The plan to take Recordati private is aimed at better exploring options, including potential new deals, across its different business lines to unlock value, a source with direct knowledge of the matter told Reuters.
Company Background and Business Segments
From Family Pharmacy to Primary Care, Chemical Businesses
Founded a century ago by Giovanni Recordati as a family pharmacy in a town in central Italy, Recordati now has businesses covering primary care, consumer health and rare diseases.
It also supplies other pharmaceutical companies through its chemicals division.
Consortium and Investor Participation
A pool of investors including Abu Dhabi Investment Authority (ADIA), Canada Pension Plan Investment Board and the company's chair Andrea Recordati will invest alongside CVC and GBL, the statement added.
Bid Structure and Shareholder Implications
Voting Stake and Delisting Thresholds
The offer seeks to secure at least a 66.67% voting stake in Recordati, a threshold that would grant the bidder control over shareholder meetings requiring a qualified majority.
Merger and Delisting Options
This includes resolutions such as the approval of a merger by incorporation into the vehicle launching the offer — an option the bidders said they may pursue if acceptances fall short of the 90% threshold required to proceed with a delisting.
Offer Price and Market Reaction
The CVC-GBL consortium confirmed the preliminary price of €51.29 per share in cash ex-dividend, a premium of 12.89% compared to Recordati's share price on March 25, the day before the Italian company announced CVC's non-binding approach.
"At the offer price, we do not view the transaction as attractive for Recordati investors", Giorgio Tavolini, an analyst at broker Intermonte, told Reuters, adding the offer would need to be raised for a delisting.
However, the fact that shares in Recordati were trading in line with the offer price on Friday signalled that investors saw limited scope for a sweetener, Tavolini said.
He added some investors at this stage may also see the transaction primarily as a way to bring about a reshuffle among Recordati’s controlling shareholders rather than a take-private deal.
Additional Information
($1 = 0.8610 euros)
(Reporting by Elvira Pollina in Milan and Giulia Segreti in Rome; Editing by Alvise Armellini, Elaine Hardcastle and Emelia Sithole-Matarise)