FRANKFURT Buyout firm Advent International raised the stakes in the three-way bidding tussle for German drug company Stada Arzneimittel (STAGn.DE) on Thursday with a 3.6 billion euro ($3.8 billion) takeover offer, giving management until Monday to respond.
Stada has become the subject of a bidding war between Cinven, Advent and a third buyout group that sources have identified as Bain Capital.
Advent's binding offer, which was not extended to shareholders directly, is for 58 euros per share in cash plus the dividend for 2016. It is limited until Monday and subject to the approval of Stada's executive board, Stada said in a statement.
Should the management board approve the offer, it could soon be extended to shareholders, though Stada signaled that it would not dismiss other options quite yet.
"The Executive Board will review the offer in the best interest of the company and will continue the open-minded talks with all interested parties," the company said.
Previous expressions of interest, which have been non-binding, were 56 euros per share from Cinven and, sources said, 58 euros from Bain.
Advent's previous offer proposal was for around 55 euros, sources close to the matter said.
Three sources familiar with the matter said that information on Stada's business provided to Advent encouraged the buyout firm to go ahead with the offer.
The limited data provided to Cinven and Bain, meanwhile, has so far kept them from making firm offers. Advent's move puts pressure on Stada to allow a fuller glance at its books, the sources added.
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 approaches vindicate 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 30 euros.
In the wake of the investor's campaign for a management shake-up, long-serving Chief Executive Hartmut Retzlaff stepped down for health reasons last year. In addition, non-executive Chairman Martin Abend was replaced by Carl Ferdinand Oetker, a 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 and also expand in areas such as cosmetics, diagnostics kits and electronic cigarettes.
Its generic drug business is under price pressure as medical insurers in Germany, its largest market, are seeking bulk procurement deals at low prices.
Under former CEO Retzlaff, it has steered clear of a major consolidation wave in the generic drugs industry, which was driven by larger players such as Teva (TEVA.TA) and Allergan (AGN.N).
Stada shares were flat at 57.65 euros at 1530 GMT.
(Additional reporting by Alexander Huebner; Editing by David Goodman)