Warner Chilcott awaits Bain offer

A consortium led by Bain Capital has urged Warner Chilcott shareholders to hold back from selling their shares while it prepares…

A consortium led by Bain Capital has urged Warner Chilcott shareholders to hold back from selling their shares while it prepares an offer for the pharmaceutical firm.

The move follows Warner Chilcott's announcement on Monday that it had received a bid of 837p per share from another group. This consortium, believed to be led by Goldman Sachs, had earlier tabled an indicative offer of 800p per share.

The Bain consortium is believed to have told Warner Chilcott last Thursday that it would be ready to table a bid within a week.

The group was subsequently told by Warner Chilcott's advisers that it must make its intentions clear by yesterday. This deadline prompted last night's confirmation that the consortium was an interested party.

READ MORE

London newspaper reports suggested yesterday that Bain and its partners - The Carlyle Group and Thomas H Lee Partners - were preparing to offer between 835p and 840p per share for Warner Chilcott. An offer at 840p would value the stake of the firm's chairman, Dr John King, at some £122 million.

Bain and its partners are expected to approach Warner Chilcott with an indicative offer tomorrow, with details of this to be released to the market on Friday. This timetable would be moved forward, however, if Warner Chilcott reached firm agreement with Goldman Sachs in the meantime.

The Bain group said yesterday that while there was no certainty that it would put forward an offer, it expected to complete its evaluation of Warner Chilcott "in the very near future"

The position of a third interested party led by Credit Suisse First Boston remains unclear, although one partner in the consortium - Warburg Pincus - is thought to have lost interest in a bid.

Analysts disagree on a fair price for Warner Chilcott, with at least one London-based commentator believing a valuation of £10 per share could be justified.

Mr Robin Gilbert of Numis in London suggests that if a deal could wait until next summer, the firm could attract bids of up to £10 per share on the basis of projected 2006 results.

He believes Warner Chilcott has proved its ability to grow organically rather than purely through acquisition and says this should support revenues over the coming year.

Mr Robert Brisbourne of Merrion Stockbrokers argues, however, that such a valuation would be stretched. He sees £8.37 as "a good price" for the company.

Shares in Warner Chilcott closed 1p stronger at 838p in London last night, having climbed to 839p in earlier trading.

Úna McCaffrey

Úna McCaffrey

Úna McCaffrey is an Assistant Business Editor at The Irish Times