Shares in UDG Healthcare spiked in Friday amid speculation that its private equity suitor, Clayton Dubilier & Rice (CD&R) may have to raise its £2.61 million (€3 billion) bid for the Irish group, after its largest shareholder said that the offer “significantly undervalues” the business.
New York-based CD&R, where UDG’s former chief executive Liam FitzGerald is a deals adviser, on Wednesday of last week agreed to pay £10.23 in cash per share for the London-listed group, a premium of 21.5 per cent the company’s closing price for the previous day.
However, the stock closed 2.2 per cent higher, at £10.46, on Friday after Allianz Global Investors, which owns 8.6 per cent of UDG, came out against the deal that has been recommended by the company's board, but remains subject to shareholder approval.
“AllianzGI firmly believes that the offer is opportunistic and significantly undervalues UDG and its prospects and is not in the best interests of shareholders,” the asset management group said.
“Consequently, based on available information, AllianzGI is minded not to accept the current offer despite it being recommended to shareholders by the Board of UDG.”
It added: “AllianzGI’s portfolio managers appreciate the intrinsic value of UDG’s business and its future potential. Having come through the trials of the pandemic with a strong balance sheet, AllianzGI believes UDG can realise the potential of recent acquisitions, consider further inorganic opportunities and improve the efficiency of its capital structure.”
The offer made by CD&R “implicitly supports AllianzGI’s view of UDG’s potential, but is at a price that does not adequately compensate existing shareholders for the opportunity foregone,” it said, adding that it is “open to discussion and would like to use this statement to remind the board of UDG of its duty to obtain a fair value for shareholders”.