The private equity arms of CSFB and JP Morgan looked set to clinch the battle for Warner Chilcott today after recruiting a rival bidding team to back their bid.
CSFB and JP Morgan said US private equity firms Bain Capital and Thomas H. Lee had joined their Waren Acquisition bid vehicle, which last week agreed a deal to buy the drugmaker for 862 pence a share making the offer worth £1.62 billion ($3 billion).
Bain and Thomas H. Lee had been working with private-equity group Carlyle on a possible challenge but threw in the towel and began talks with Waren Acquisition after the group announced its recommended share offer.
A third consortium comprising the private equity arm of Goldman Sachs and buyout firms Blackstone and Texas Pacific have also been pursuing Warner Chilcott.
Weekend newspaper reports said this team had been prepared to pay 865p a share for the firm, but that it missed the deadline for the auction.
Sources close to the situation say the Goldman team may now be deterred from challenging Waren's bid because it would have to cover the cost of a break fee of about $30 million.
In addition, Warner Chilcott has agreed to let Waren Acquisition match any competing offer, making it even harder for the Goldman-lead team to succeed.
Shares in Warner Chilcott, which is prized for its strong cash generation and expansion opportunities, have traded as high as 875p on hopes of a bidding war. The stock closed yesterday at 864p.