Private equity firm to increase offer for UDG Healthcare to £2.7bn

The private equity firm Clayton, Dubilier & Rice is to increase its offer for UDG Healthcare to £2.7bn after major shareholders in the Dublin-based company opposed the first bid.

CD&R, which is also seeking to take over the UK supermarket chain Morrisons, is “considering a new and final offer” valuing the business at £10.80 a share, London-listed UDG said in a statement to the stock market.

UDG was forced to postpone an extraordinary general meeting to vote on the original deal, which had been scheduled for Friday, after CD&R’s initial £10.23-a-share offer in May resulted in shareholder opposition.

The board of UDG had recommended the initial offer but Allianz Global Investors, its largest shareholder, came out against the deal, saying the bid was “opportunistic and significantly undervalues UDG and its prospects”. According to media reports, the investor M&G was also against the level of the first offer but did not put out a public statement.

As a result, UDG postponed the extraordinary general meeting as the two sides resumed negotiations over a sweetened deal.

Weeks after CD&R made its first offer, Elliott Investment Management, a high-profile activist investor that has forced change at major corporations including the US telecoms giant AT&T, took a 3.1% stake in UDG.

UDG said it has not received any rival buyout proposals. Shares rose 1.1% on Friday to £10.58.

Last Saturday, Morrisons, the country’s fourth-largest grocer and employer of 110,000 people, rejected an unsolicited £5.5bn takeover offer from CD&R.

Morrisons’ share price has climbed from 178p prior to the offer being made to 233p on Friday, indicating that investors are hoping for an improved offer – or rival bid – although that is only just above CD&R’s initial 230p-a-share offer.

Source: The Guardian