By Mark McSherry
Swedish private equity firm EQT and the Abu Dhabi Investment Authority (ADIA) have agreed a deal to buy Cheshire veterinary drugs giant Dechra Pharmaceuticals for £4.46 billion in the biggest European take-private transaction this year.
EQT and ADIA would pay £38.75 per Dechra share in cash, the companies said on Friday, lower than the £40.70 proposed in April — after Northwich-based Dechra issued a profit warning in May.
Despite the price cut, the offer would still represents a 44% premium to Dechra’s closing price of £26.90 on April 12, the day before the companies announced a potential takeover.
EQT would own 74% of Dechra on completion of the deal, while its co-investor, the private equity arm of the Abu Dhabi Investment Authority, would own own 26%.
Dechra directors intend to recommend unanimously that shareholders vote in favour of the revised deal.
The completion of the transaction is conditional on a shareholder vote and approval from competition regulators.
A research note published by TD Cowen said: “Key to deliverability and timing will be regulatory approval and in particular (the Competition and Markets Authority).
“It is a sector and a buyer that the CMA is very much focused on.
“We would expect the merger review and party discussions to take time. We would caution against aggressive close expectations.”
Dechra chair Elizabeth Alison Platt said: “Since IPO in 2000, the successful pursuit of our growth strategy … has seen Dechra develop from a specialist UK only veterinary distribution business into a global veterinary pharmaceuticals and related products business, ranked seventh globally by revenues, with operations in 26 countries and over 2,400 employees.
“Dechra is now recognised as a global leader in therapeutic areas such as endocrinology and topical dermatology, as well as being an innovator in specialisations such as the treatment of equine lameness and differentiated generics.
“The Dechra board considers EQT, together with ADIA, to be highly experienced investors with a strong sector understanding who will, we believe, prove to be responsible and supportive owners of Dechra and who can build on this legacy and further accelerate the Dechra Group’s growth.
“As such, it is our view that accepting this proposal represents the best interests of all stakeholders and in particular represents a compelling opportunity for shareholders to realise, in cash and with certainty, Dechra’s potential for future value creation.”
Anthony Santospirito, partner in the EQT Private Equity advisory team, said: “Dechra is a high-quality, innovative business founded in the UK with an impressive global footprint.
“With medical innovation accelerating and pet ownership increasing, the animal health sector is expected to benefit from long-term growth and we believe Dechra is well positioned to participate in this significant opportunity.
“We plan to support Dechra’s talented management team accelerating their business strategy and long-term growth in an increasingly competitive environment by providing, where needed, additional investment in its innovative pipeline and further supporting global expansion.
“We believe that private ownership will enable Dechra’s management team to take a longer-term view as it focuses on accelerating growth.”
Bloomberg reported that Blackstone Inc. and Goldman Sachs Asset Management are leading a £1.25 billion direct lending deal to support the take-private of Dechra, saying Blackstone and Goldman Sachs are committing £400 million each to the transaction.