Zentiva turns down PPF subsidiary Anthiarose as Sanofi makes rival bid

Czech drugmaker Zentiva NV on Friday, June 20, urged shareholders to reject an offer from by Anthiarose Limited, a wholly owned subsidiary of local financial group  PPF Group N.V, on 17 June 2008, at Czech krona (CZK) 950 per share, saying that the offer fails to reflect the company's underlying value and future prospects.

The board rejected the offer within two days of French pharmaceuticals giant Sanofi-Aventis making a rival offer of 30 billion Czech koruna (CZK) or $1.93 billion, which works out to CZK050 per share, for the three quarters of Zentiva it stake that it did not already own.

The Netherlands-headquartered Zentiva, which is listed on the Czech exchange will hold an extraordinary shareholder meeting on July 9 to discuss the two offers, as required by Dutch laws.

Though Zentiva did not say it preferred the Sanofi offer, analysts say it would prefer the offer by a drugmaker rather than a financial investor,  in its statement to share holders, it indicated as much, saying, "Zentiva is well placed to participate in the further expected industry consolidation and shareholders could miss out on participating in the benefits of a synergistic transaction or from receiving a premium in a change of control transaction." 

Both the bidders hold a subsatantial stake in the Czech drug firm and - Sanofi has held 24.9-per cent  in Zentiva for the past wo years, PPF and its subsidiary Generali PPF Holding BV together own about 19.2 per cent.

Analysts say the bids by the two biggest shareholders represents a battle for control of Zentiva and expect Anthiarose to return with an improved offer.

''Whilst the board welcomes the support of any shareholder with a long-term commitment to building further value in Zentiva, the board remains committed to maximizing value for all stakeholders of Zentiva and as a result we are of the opinion that the price per share being offered by Anthiarose Limited is not adequate for shareholders," said Jirí Michal, chairman of the board and CEO of Zentiva, in a statement.

"We strongly believe that the offer price fails to reflect the underlying value of Zentiva and its future prospects. Therefore, based on the assessments and the information contained in the position statement we have issued today, the Board recommends shareholders not to accept the offer,'' Michal added.