BASF Prevails in Struggle To Take Over Pronova
BASF has prevailed against the last shareholders of Norwegian biopharmaceuticals producer Pronova who had been holding out for larger pay offs. With nearly 98% shares in hand on 21 January and all regulatory approvals obtained, the German group said it would settle the offer within 14 days and close the transaction during the first quarter. Based on all outstanding shares and net financial liabilities, it estimated the company's value at just under NKr. 5 billion (around €684 million).
The takeover bid was officially launched in early December 2012 and the acceptance period later extended until January 18. A few days before the deadline, having fallen short of its targeted tender of 90% of all shares, BASF sweetened the deal from NKr 12.50 to NKr 13.50 per share. The psychological breakthrough may have come when Nykredit Asset management, an investor holding 1% of the omega-3 fatty acids specialist's equity agreed to tender its shares. It would have been difficult being part of a free float of only10-20%, the portfolio manager said in an interview.
The world's largest chemical producer said its increased offer for the Norwegian company corresponds to a premium of 34% above the volume-weighted average price for Pronova's shares in the six months prior to publication of the bid. BASF management board member Michael Heinz said his group firmly believes the acquisition, which will strengthen its and Pronova's position in the omega-3 market, provides the "the best strategic option" for the further development of the business.
Through the deal, BASF will gain a leading global position in the market for the fish oil used in treatment of cardiovascular diseases and also marketed as a nutritional supplement. Heinz said a detailed integration plan, combining the German giant's worldwide presence and technical knowhow with Pronova's strong expertise and good position, will be developed during a discovery phase after closing.
In combination with its prior acquisitions of Cognis and Equatec, the Pronova takeover will help BASF cover the entire omega-3 range from food grade to highly concentrated drug ingredients and compete with other European market players such as DSM and Croda. Overall, the German group, which is already cooperating with U.S. agricultural products manufacturer Cargill to extract the fatty acids from new types of rapeseed, sees the market as growing by 8% annually up to 2020.
In its quest to gain a stronger foothold in nutraceuticals, BASF evidently had better cards than compatriot Bayer, which after a protracted battle was forced to withdraw from the race to acquire U.S. vitamin maker Schiff Nutrition following a higher bid from the UK's Reckitt Benckiser.
