💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

UPDATE 3-Celesio and owner Haniel smooth over takeover rift

Published 07/01/2009, 02:09 PM
TTEF
-
CAKFF
-

* Says CEO, Chairman concur on Brazil takeover

* Haniel earlier said has "legal and financial" concerns

* Board decision postponed - sources

* Celesio cites lack of quorum in e-mail on Tuesday

* Celesio shares pare gains, close up 3.7 percent

(Releads with agreement)

By Frank Siebelt, Nikola Rotscheroth and Ludwig Burger

FRANKFURT, July 1 (Reuters) - Celesio said its chief executive and chairman would jointly pursue the German drug distributor's foray into the Brazilian market, smoothing over differences that had emerged between the two.

Celesio's majority shareholder Haniel earlier on Wednesday said that the family behind the privately-held conglomerate and its CEO Eckhard Cordes, who is chairman of Celesio, had "legal and financial concerns" about Celesio's planned purchase of Brazilian drugs distributor Panpharma.

Cordes had however been briefed on the acquisition project well in advance, Haniel added.

The deal, which was announced on Monday, was due to be rubber-stamped by Celesio's supervisory board on Tuesday, but the matter was deferred to the next meeting amid concern about the speed of the company's expansion, sources with knowledge of the matter told Reuters.

The acquisition of Brazil's largest drugs distributor, which generated sales of 3 billion real ($1.55 billion) last year, marks Celesio's first major expansion step outside Europe and is in line with the company's strategy to grow in emerging markets.

Celesio CEO Fritz Oesterle and Chairman Cordes "have confirmed their consent this afternoon in a phone conversation" to drive the takeover deal to a conclusion, Celesio said in its statement.

The stock market had initially welcomed the deal and Celesio's shares gained more than 13 percent this week before Wednesday's news that Haniel's Cordes had put the brakes on the approval process.

The shares pared gains amid fear the deal might collapse, but still managed to close 3.7 percent higher on Wednesday.

"Considering Haniel's stake, they can veto this, which would not be good," a London-based analyst said earlier.

"Growth opportunities in Europe are very limited in wholesale ... Brazil would have been a positive step to diversify," the analyst added.

Celesio's announcement of a final accord came after the end of official trading.

In an email to analysts on Tuesday seen by Reuters, the company said that the board meeting had "been postponed to guarantee full attendance" and that the board would meet again within the next two weeks.

Celesio on Wednesday confirmed the board would formally decide on the matter in the next two weeks.

EXPANDING IN SWEDEN

In a separate statement on Wednesday, Celesio said it aimed to set up a chain of more than 100 pharmacies in Sweden to benefit from deregulation in that country and reduce dependence on the British market.

Celesio had announced on Monday it agreed to acquire 54 percent in Panpharma via a capital increase at the privately held Brazilian company, one day after Reuters reported the deal was imminent.

Celesio at the time did not disclose financial terms but financial market sources put the price at less than 200 million euros ($281.4 million).

Commerzbank analysts earlier this week said the purchase "could yield a compelling growth outlook" while analysts at Morgan Stanleysaid the move was "incrementally positive".

Haniel holds a 55.8 percent stake in Celesio. Its chief executive Cordes also heads German retail giant Metro, in which Haniel holds a key stake.

Celesio is following through on its strategy to reduce dependency on Britain, where it makes almost half of total operating earnings.

The owner of the Lloyds Pharmacy chain has been hurt by lower payments for generic drugs introduced by Britain's National Health Service and a weak pound against the euro.

Options to expand in its German home market also remain limited after Europe's highest court upheld German legislation preventing non-pharmacists from setting up shop there. ($1=.7107 euros) (Editing by Mike Nesbit and Elaine Hardcastle)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.