CVC Capital Partners has increased its offer to take Italian pharmaceutical company Recordati private to €10.5bn ($11.8bn) after minority shareholders criticised the original proposal as undervaluing the business, according to Private Equity Wire. CVC and investment partner Groupe Bruxelles Lambert (GBL) raised the cash consideration to €53 a share from €51.29, and said the revised proposal is final and will not be increased again, according to Private Equity Wire.
Revised economics and process updates
CVC and GBL raised the cash consideration for Recordati to €53 per share from €51.29, according to Private Equity Wire. The firms said the revised proposal is final and will not be increased again, according to the same report. The offer’s acceptance period has been extended by eight days to 23 October, according to the report.
Ownership position and delisting plan
CVC already owns almost half of Recordati, according to Private Equity Wire. CVC agreed in May to acquire the remaining shares alongside GBL, and the transaction is intended to result in Recordati’s delisting, according to the report.
CVC acquired just over half of Recordati from its founding family in 2018 for about €3bn, according to the report. The private equity firm began exploring potential strategic options for the business in 2024, according to the report.
Board and shareholder reactions
The higher bid follows mounting opposition from minority investors, according to Private Equity Wire. Recordati’s board backed the original offer in July, although its independent directors opposed the deal and argued that the price was financially inadequate, according to the report.
Activist investor Palliser Capital urged the board to withdraw its support unless CVC raised the offer to €60 a share, arguing that minority shareholders were being put under excessive pressure to accept the deal, according to the report.
Market and analyst response
Paola Saglietti of Banca Akros said the €53 offer remained unattractive and did not adequately reflect Recordati’s standalone value and growth prospects, according to Private Equity Wire. Recordati shares rose as much as 1.8% to €53.15 in Milan following the announcement, according to the report.
Recordati stock had been trading above €46 in late March, before the company disclosed that it had received an expression of interest from CVC, according to the report. CVC said the new price represents full and fair value for Recordati, taking into account the company’s standalone prospects and a broader decline in valuations across Europe’s healthcare and specialty pharmaceutical sectors, according to the report.
As widely known context, a take-private transaction is designed to move a listed company into private ownership and typically results in the company’s shares no longer trading on a public exchange. As widely known context, activist investors commonly press for improved terms in public-company transactions by arguing that consideration does not reflect standalone value.
