Warner Chilcott has agreed a £1.6 billion (€2.3 billion) takeover deal that will net at least £170 million in cash for two of the pharmaceutical firm's top managers.
The Craigavon-based company said yesterday that it had reached a buyout agreement with Credit Suisse First Boston and JP Morgan. The two companies form the Waren consortium, which is one of three private-equity groups that have been circling Warner Chilcott for more than a month.
The agreed cash offer would see Waren pay 862p for each Warner Chilcott share. It has been recommended by Warner Chilcott's board, with the exception of chief executive Mr Roger Boissonneault, who is expected to join the group that succeeds in taking over the company and has taken no part in considering bids for the group.
Warner Chilcott's directors are also committed to accepting the offer in respect of their collective 10.7 per cent shareholding.
This would see the firm's executive chairman and largest shareholder, Dr John King, raising £126 million for his 7.7 per cent stake. Mr Geoffrey Elliott, the firm's chief financial officer, would receive £47 million for his 2.9 per cent holding. The two also hold options over thousands of Warner Chilcott shares.
The recommending directors said yesterday that their stance was based mainly on the 33 per cent premium being offered over Warner Chilcott's share price before the offer period began.
Dr King said the directors were "very excited" at the opportunity.
However, their acceptance can be revoked if a counter offer of at least 887p emerges over the next 28 days. Waren would then have the opportunity to match the new offer or walk away with a "break" fee of £17 million.
The prospect of one of the two competing interested parties making such a move remained uncertain last night, although analysts believe the race may not be over yet.
Davy Stockbrokers analyst Mr Jack Gorman said there was a "possibility" of new or revised offers, although he pointed out that the level of increments in approaches made so far has been small.
A group led by Goldman Sachs tabled an indicative offer of 837p per share for Warner Chilcott late last week. The same consortium had earlier made an approach at 800p.
The third grouping - led by Bain Capital - urged shareholders on Tuesday to hold off from selling to any party until it was ready to move on a firm approach. Bain could not be contacted last night.
Mr Robin Gilbert of London-based broker Numis said yesterday that he would be surprised if Goldman Sachs walked away from the race at this stage.
Mr Gilbert believes the successful bidder will delist Warner Chilcott, keep it private for less than a year and then re-float on the New York Stock Exchange at a "considerably higher price".
In this light, he sees justification for an offer price of up to £10 a share. The company's shares traded strongly yesterday, suggesting that some investors share the view that higher offers could emerge. Shares gained 4 per cent to close at 871.5p.
Warner Chilcott also released results for the fourth quarter of 2004 yesterday. The numbers came in a touch ahead of most expectations but analysts said the outperformance was not sufficient to prompt upgrades or influence the takeover process.
The firm, which reports in dollars, posted operating profits of $272.1 million (€214.2 million) for the full year to September 30th, which was up 46 per cent on the previous 12 months. This came as sales climbed by 21 per cent to $522.9 million.
The performance was boosted by contract manufacturing revenues from the firm's recently acquired manufacturing plant in Puerto Rico.
The next move on the takeover process will come when offer documents are posted to Warner Chilcott shareholders. This will be followed by a shareholder meeting in December, at which Waren requires approval in respect of 75 per cent of shares held by those voting.
