Warner Chilcott Share Discussion Threads

[matthu] 04/10/2004 00:32

from The Times (4 Oct)

More bidders could show their hands in the battle for Warner Chilcott, the women's healthcare company, as early as today. Attention is likely to focus on Credit Suisse First Boston, which is looking at the company, and Barr Laboratories, an American drugs group that tried and failed to buy Warner for £1.5 billion last year. Another contender, Kohlberg Kravis Roberts, said that it had joined a consortium led by Goldman Sachs.

[matthu] 04/10/2004 00:31

from Sunday Times:
KKR teams up with Goldman for pharma bid
Paul Durman

THE American buyout specialist Kohlberg Kravis Roberts (KKR) has joined the Goldman Sachs-led consortium that is bidding £1.5 billion for the drugs group Warner Chilcott.

KKR's decision to team up with Goldman may pose difficulties for CSFB Private Equity, which is also seeking to put together a deal. CSFB has worked with KKR on several previous transactions.

As KKR linked up with Goldman Sachs and its consortium partners Blackstone and Texas Pacific, it also emerged that a third team is seeking to mount an offer for Warner Chilcott. This is led by Bain Capital, another American buyout firm, and is supported by Carlyle Group and Thomas H Lee.

Shares in Warner Chilcott, known until June as Galen, climbed a further 48½p to 815½p on Friday after the company announced that it had received a second approach.

Only two of the bidding consortiums, including Goldman's team, have so far agreed terms to conduct a due-diligence investigation of Warner Chilcott.

Goldman has proposed a cash offer of 800p a share, but it looks as if the final price agreed could be much higher.

John King, Warner Chilcott's chairman, has brought in Greenhill, the investment bank, to advise his board on the conduct of the auction. This is in addition to Hoare Govett, the group's existing adviser.

The competition to buy Warner Chilcott is a testament to the company's strong growth since it floated on the London stock market seven years ago.

Operating profits have grown from $30.5m in 1999 to $125m last year, while sales have quadrupled from $109m to $432m during the same period.

The business's success created a £300m fortune for Allen McClay, now retired, who founded the company in 1968.

King, who succeeded McClay as chairman, has a stake worth about £120m, while Geoffrey Elliott, chief financial officer, has a holding valued at close to £80m.

Warner Chilcott has increasingly specialised in women's health, including contraceptive pills and hormone-replacement therapy.

The sale of its pharmaceutical services and manufacturing activities means that the vast majority of the company's business is now in America.

This has caused some tension between Warner Chilcott and its largely British shareholders. Additionally, it has made King, who continues to have a home in Britain, more open to a sale of the business.

Last year, Galen, as it then was, was briefly in talks with Barr Laboratories, the American drugs company. The collapse of that deal failed to flush out other trade buyers, and many experts believe the company will be bought by private- equity bidders.

The group's growth has been driven by a series of acquisitions. Galen bought the Warner Chilcott business in September 2000. Last year it paid $295m for Eli Lilly's Sarafem, a treatment for a severe form of premenstrual syndrome, and then a further $359m for two contraceptives owned by Pfizer.

[silverfern] 03/10/2004 16:26

I like the word 'crystalise' to describe someone making £120m over and above their substantial salary! This is not the kind of crystal you buy your mum for Xmas from the Reject Shop at the age of fourteen.

[matthu] 02/10/2004 10:45

from The Times:
Warner Chilcott shares boosted by second bidder
By Tom Bawden and Richard Irving

SHARES in Warner Chilcott jumped 48½p to 815½p yesterday as a second consortium of private equity groups, led by Bain Capital, the US buyout firm, joined the bidding contest with an indicative cash offer of 835p to 840p a share.

The approach, which is also backed by Carlyle Group and Thomas H. Lee, values the pharmaceutical group, which was formerly known as Galen Holdings, at about £1.57 billion.

The offer tops an earlier all-cash approach of about 800p a share from a consortium of private equity bidders. The group, comprising Blackstone, Texas Pacific and the private equity arm of Goldman Sachs, began due diligence on the group on Thursday.

It is understood that at least one other party, thought to be Credit Suisse First Boston, is considering an indicative offer. CSFB often acts in conjunction with Kohlberg Kravis Roberts, the US venture capital group that is known to be interested in adding small British drugs groups to its portfolio of investments.

Analysts also refused to rule out the chances of a trade buyer joining the auction. Last year Barr Laboratories, a US drugs group, tabled a £1.5 billion bid for the group, but withdrew the offer after its terms were leaked. A spokeswoman for Barr said yesterday that the company would not comment on "questions of potential acquisitions".
Greenhill & Co, the investment banking boutique that specialises in handling auctions to venture capitalist buyers, said Hoare Govett had been hired to handle the sale.

A deal will crystalise the fortunes of John King, executive chairman, and Geoffrey Elliott, finance director. Mr King will make more than £120 million, while Mr King will earn £44 million.

Warner makes a number of healthcare products, including Sarafem, a treatment for severe premenstrual tension syndrome, and the contraceptives Ovcon and Estrostep. The company employs about 120 staff in the UK.

[matthu] 01/10/2004 10:17

Thanks for alerting us, Faz. This from Bloomberg:

Warner Chilcott Says Another Bidder Makes Approach (Update3)
Oct. 1 (Bloomberg) -- Warner Chilcott Plc, the Northern Ireland drugmaker formerly called Galen Holdings Plc, said it was contacted by second potential bidder after being approached last month about a possible 1.5 billion-pound ($2.7 billion) takeover.

The new approach ``may or may not lead to an offer,'' the Craigavon, Northern Ireland-based company said in a Regulatory News Service statement. Warner Chilcott shares rose as much as 4.3 percent.

The shares soared 15 percent on Sept. 20, when the company said a group of private equity firms it didn't name had approached it about a possible offer at about 800 pence a share. Blackstone Group Plc, Warburg Pincus LLC and Kohlberg Kravis Roberts & Co. are among companies considering a bid, the Financial Times has reported. The company may have invited a second bidder to make a better offer, said Robin Jeremy Gilbert, an analyst with Numis Securities Ltd. in London.

``I think 8 pounds undervalues the company,'' Gilbert said. ``The first approach was uninvited, but clearly the company recognizes that if there's an approach around eight pounds, from the point of view of shareholders they have to invite other approaches. I think more like 10 pounds is what the company is looking for.''

The shares rose 30 pence, or 3.9 percent, to 797 pence at 9:19 a.m. in London trading.

Warner Chilcott said the new potential bidder ``has entered into a confidentiality agreement with the company and is beginning due diligence.''

The drugmaker, which ended talks last year with Barr Laboratories Inc. last year, has sold off less profitable units in the U.K. to focus on marketing birth-control pills and other women's health products in the U.S. During its fiscal third- quarter ended June 30, the company posted a 19 percent gain in net income to $36.6 million as it cut marketing and research spending and gained from the sale of businesses.

Yesterday, Warner Chilcott said it hired Greenhill & Co. to be co-adviser with ABN Amro Holding NV's Hoare Govett.

Company Suitors

Mid-size drug companies, such as U.K.-based Shire Pharmaceuticals Group Plc, may also look at acquiring Warner Chilcott, Gilbert said.

Shire Chief Executive Officer Matthew Emmens has said Shire plans to use its cash of about $1 billion to buy companies or products.

Warner Chilcott is focusing on the U.S. market, and changed its name from Galen Holdings in June. It's stepped up promotion of products such as Estrostep and Loestrin, oral contraceptives the company bought from Pfizer Inc. in March 2003, and Sarafem, an antidepressant for severe premenstrual syndrome it bought from Eli Lilly & Co. in December 2002.

Sarafem was the only major product that showed a decline in sales in the quarter, the company said. Sales declined 69 percent to $6.7 million, the company said. The U.S. District Court for the Southern District of Indiana upheld the validity of the company's Sarafem patent, which had been challenged by Teva Pharmaceutical Industries Ltd.

The company's two oral contraceptive products Ovcon and Estrostep are now the primary focus of its sales force, Warner Chilcott said. Ovcon sales rose 22 percent to $19 million in the quarter, while Estrostep rose 46 percent to $16.5 million, the company said.

Warner Chilcott Chairman John King owns about 7.7 percent of the company's shares, which would be worth about 115.8 million pounds at 800 pence a share, Bloomberg data says. Chief Financial Officer Geoffrey Elliott's 2.87 percent share would be valued at 43 million pounds.

Company founder Allen McClay netted 97.2 million pounds in April by selling his 6.3 percent share of the company. McClay, who founded the company in 1968 and retired in 2001, has purchased several of the company's units.

[faz] 01/10/2004 09:44

It would have been surprising if no other bid emnerged. I believe this is tillway undervalued but thenI don't have a billion to spend !

[madaboutmoney] 30/9/2004 13:25

ING says strong buy - wait for rival bid target 900p a share

[samuri] 30/9/2004 08:03

Statement with respect to possible offer for Warner Chilcott


On 20 September 2004 the Board of Directors confirmed that they had received an
approach from a consortium of private equity institutions which may or may not
lead to an offer, at an indicative price of 800 pence per share in cash, for the
entire issued share capital of Warner Chilcott.

The Board now confirms that it has entered into a confidentiality agreement with
the consortium, and that the consortium is now undertaking due diligence into
the Company.

The Board of Directors wishes to reiterate that the approach remains preliminary
in nature and is subject, inter alia, to various pre-conditions including
financing and due diligence. There can be no certainty either that an offer
will actually be made or to the level of an offer, if made.

The Board of Directors has appointed Greenhill & Co. International LLP as joint
financial adviser with Hoare Govett Limited.



A further announcement will be made in due course, if appropriate.



Enquiries:


Warner Chilcott PLC Telephone [phone]
John King
Geoffrey Elliott


No doubt now that intentions are serious and hopefully this will prompt others to take a look at this undervalued company.

[matthu] 27/9/2004 00:20

(BizWorld)
Warner Chilcott, the pharmaceutical group previously known as Galen, has come out fighting in a bid to better the E2.14bn takeover attempt from a Goldman Sachs led consortium.

The pharma group has appointed investment bank Greenhill to help it find alternatives to the current bid, the Sunday Times reports.
John King, chairman and one of the biggest shareholders, is keen to secure the best price for a business that has grown strongly since it floated in London seven years ago.

He has recruited Greenhill to work alongside Hoare Govett, the company's existing adviser. Greenhill has a bigger US operation and recent experience of the bid for Debenhams.

Goldman is heading a private-equity consortium that includes Blackstone and Texas Pacific Group. The three firms have proposed a cash offer of 800p a share.

They are seeking to agree the terms of a due-diligence investigation before confirming their offer in the next few weeks.

Analysts believe any rival bidder is more likely to come from the US private-equity world than from the pharmaceutical industry.

[matthu] 22/9/2004 22:11

Well, who am I to argue with Dresder Kleinwort? 1,000 p

[ok,yah] 22/9/2004 18:57

These just keep rising on the prospect of a bidding auction no doubt, when I bought these a few days ago at 6.07 didnt expect them to go up so quick. How high can these go

[matthu] 21/9/2004 09:14

from
Venture firms bid for renamed Galen
By Rosie Murray-West and James Moore (Filed: 21/09/2004)

Warner Chilcott, the recently renamed Galen Holdings, said yesterday it had received a bid approach from a consortium of venture capitalists believed to be led by Goldman Sachs Capital Partners, pushing the shares up 97 to 745p.

John King, the chairman of the niche pharmaceutical business, said the company was considering an indicative offer of 800p a share, or almost £1.5 billion.

He did not name potential suitors, but it is understood that the consortium also includes The Blackstone Group and Texas Pacific. Goldman Sachs is believed to be advising the consortium.

Warner Chilcott is focused in North America and on products for women. Its shares tumbled recently after worries over the safety of hormone replacement therapy and patent expiries. They reached 874p early this year, prompting analysts to suggest the board might reject an approach at this level.

Shawn Manning, at Dresdner Kleinwort Wasserstein, said: "We believe a potential acquirer could pay anything upwards of 800p a share.

"We believe the bid will be given serious consideration, particularly given the stock's recent poor performance. In addition, high counter-bids are possible from a US branded generics player already well-established in female health."

Roger Boissoneault, the company's chief executive, is not involved in the deliberation over the bid approach. It is understood that he was not involved with the venture capitalists, although he might be at a later stage, so the board had considered it prudent to exclude him from discussions.

Last year, the company received another takeover offer, believed to be from Barr Laboratories, which makes generic drugs. The indicative offer was at the same level as the current offer, but fell through after the news leaked out.

from

US groups make £1.5bn bid for Warner Chilcott
By Stephen Foley 21 September 2004

Warner Chilcott, the Northern Ireland drug company which recently changed its name from Galen, is negotiating an 800p-a-share takeover by a consortium of US private equity groups.

The company's shares jumped 15 per cent to 747p after it admitted it had received an all-cash approach which would value the women's healthcare specialist at £1.5bn.

The board is yet to meet to discuss the offer but Roger Boissonneault, the chief executive, will step back from that discussion. He is likely to be asked to stay on to run Warner Chilcott in private hands.

It is possible that John King, the executive chairman who stands to net £118m for his 8 per cent stake, and Geoffrey Elliott, the finance director, who holds 3 per cent, would continue as non-executives.

The consortium of three private equity houses includes Blackstone, which was recently runner-up in the bidding war for Odeon cinemas and is also attempting to build a large private nursing homes business in the UK. The identities of the other two members remained unclear last night.

Warner Chilcott's products, built up through a string of acquisitions in recent years, include hormone replacement therapies, oral contraceptives and acne treatments.

Warner Chilcott was forced into an announcement after details of the talks leaked into the market and drove up the share price last week. It is the second time in the past year the company has attracted bid attention, receiving an indicative offer from Barr Laboratories, another specialist in oral contraceptives, which sent its shares up to 750p at one point.

Some analysts were speculating yesterday that Barr and others would want to look again at the company now it is "in play" as a takeover target. Shawn Manning at Dresdner Kleinwort Wasserstein said: "Counter-bids at a higher price are possible from a US branded generics player already well established in female health, such as Teva, Mylan, Barr or Watson."

The closing share price of 747p reflected scepticism over a bid war and Warner Chilcott's own warning that the bid is subject to conditions, and may finally be set at a lower price than 800p.

It is believed the Blackstone consortium is hoping to engineer a financial restructuring at Warner Chilcott and float it quickly on the US stock market, where pharmaceuticals companies are typically valued more highly than by UK investors. The company's products generate cash but their prospects for significant sales growth have been fiercely debated in the City.

Warner Chilcott considered moving its own listing to the US earlier this year in the hope of enjoying an improved valuation, but ruled out the idea because of likely resistance from its shareholders.

Galen was founded in 1968 as a contract manufacturer and research partner for other drug companies. It turned itself into a speciality pharmaceuticals company in its own right through product acquisitions and the appointment of a large US salesforce. The key moment in its transformation was the acquisition of Warner Chilcott of the US in 2000, which brought in Mr Boissonneault as chief executive.

No one was said to have been more disappointed when Barr Laboratories walked away from merger talks than Warner Chilcott'scombative executive chairman.

After 25 years with the Northern Irish drug maker, John King is widely believed to be keen to cash in his 8 per cent shareholding, which could net him £118m.

One analyst said: "He has a pad in France, a pad in Kildare and, reputedly, one of the fastest boats on the Mediterranean. Not unreasonably, he is fed up dealing with the complaints of shareholders and people like me."

Mr King has cashed in an estimated £75m from selling shares over the past few years, and is paid half of his salary by Warner Chilcott's subsidiary in Bermuda.

from

US consortium offers £1.5bn for Warner Chilcott
Heather Tomlinson Tuesday September 21, 2004 The Guardian

Women's healthcare business Warner Chilcott has been approached with a £1.5bn cash offer by a consortium of American private equity companies, believed to include the Blackstone Group.
The bid could bring executive chairman John King a £116m windfall and finance director Geoffrey Elliot £43m if it is successful, because both hold substantial stakes in the business after 36 years at the company between them.

The bid approach was made in the past few days. The offer of 800p a share comes after interest from the American generic drugs group Barr Laboratories last year.

The approach was made by several US private equity groups which are understood to be advised by Goldman Sachs.

The Warner Chilcott board is being advised by Hoare Govett. Chief executive Roger Boissonneault is not involved in the discussions. He has not been approached by the bidding consortium yet, but the board has excluded him from the talks because he is likely to be approached by the buyers.

Warner Chilcott, originally called Galen Holdings, has changed radically over the past few years. The original businesses have been sold to former chairman Dr Allen McClay, who has sold his stake in the company. It bought US company Warner Chilcott in 2000 and its brands are almost entirely the products of that acquisition.

The Northern Ireland firm's shares rose 15% to 747p yesterday, short of the potential offer, because the City was sceptical that a deal would go through. One industry expert said Warner Chilcott faced fears about litigation, which could deter potential bidders. It makes contraceptive pills and hormone replacement therapy, both of which are subject to health scares.

The company's board will meet shortly to discuss its response to the bid approach. "The board can confirm that they have received an approach from a consortium of private equity houses which may or may not lead to an offer, at an indicative cash price of 800p per share, being made for the entire issued share capital of Warner Chilcott," a company statement said.

Although the bid is well above the previous market price for the firm, some analysts think it is undervalued. "We maintain our belief that Warner Chilcott is worth 1,000p per share," said research from investment bank Dresdner Kleinwort Wasserstein yesterday. "However, we believe the bid will be given serious consideration, particularly given the stock's recent poor performance."

It touted drugs firms that are already in female healthcare as potential counter-bidders, including Teva, Mylan and Barr.

[silverfern] 21/9/2004 08:46

THe INdependent editorial says the company is not fully valued at 800p.

[silverfern] 20/9/2004 21:51

Thanks for the above- I think the line is right - the CEO is key to unlocking value. This is a plain signal the company is way undervalued and not just on its acquired products but on it very capable management. I would like the bid NOT to emerge but the City to revalue this company. Of course I would- but even without my investment I'd think that. Last week I nearly bought more - it was the only share in my portfolio I would add ...but guess what, same old story :)

[samuri] 20/9/2004 21:06

silver

yes i'd temporarily forgotten that RB was a Warner man when Galen bought them. What I find interesting is that no majors have yet shown any interest in this company since the Barr fiasco which got McClay out for an astro gain over that long weekend in July last year, and I got shafted. Not sure whether to come out with my nose clean or wait for a serious bid. Merrills reiteratd a buy stance and their target price in May was £9.60. Are they just talking their own book?

[silverfern] 20/9/2004 19:32

i agree - it's way too low, and it may be a management buy-out, at least one board memeber seems involved. What this says is what we belive anyway - that the comany is way undervalued at current prices. 800p would be derisory imho - £10-11 would be in the region, but the current price takes no account of growth.

[samuri] 20/9/2004 10:52

Hadn't realised people not seen this a.m's news.

Craigavon, Northern Ireland/Rockaway, New Jersey, USA - 20 September 2004:
Warner Chilcott PLC ('Warner Chilcott') (LSE: WCRX, Nasdaq: WCRX).



The board of Directors has noted the recent speculation in the media regarding
the possibility of an offer for the Company. The board can confirm that they
have received an approach from a consortium of private equity houses which may
or may not lead to an offer, at an indicative cash price of 800p per share,
being made for the entire issued share capital of Warner Chilcott.



The board, other than Roger Boissonneault, the Chief Executive Officer, who in
view of the nature of the approach is not currently participating in these
deliberations, is considering the appropriate response to this approach.



The board wish to make clear that the approach they have received is preliminary
in nature and is subject to, inter alia, various pre-conditions including
financing and due diligence. There can be no certainty that an offer will
actually be made. Furthermore, there can be no certainty as to the level of any
offer. A further announcement will be made in due course, if appropriate.

[kael] 20/9/2004 09:46

Its been bid for?

[matthu] 20/9/2004 09:24

Can anyone explain the sharp turnaround in price?

[samuri] 20/9/2004 08:36

At the current price (747p) PE just over 11 based on 2005 earnings of 67p. An offer at 800p values the business at PE just over 12. This is still to low in comparison to its peers.

[ok,yah] 15/9/2004 11:59

Yes todays move will confirm the change in trend from bearish to bullish (assuming a close above 6.20). Hoping for move up to £7.00 and beyond fairly short term

[techair] 15/9/2004 11:09

Nice move today

[ok,yah] 13/9/2004 12:13

Consensus earnings per share 59.28p rising to over 67p the following year. Looks like a chart breakout from the downtrend. I would expect this to rise soon.

[korg_uk] 02/9/2004 12:30

Hi All, I'm back in on this after buying and selling it as Gallen. Does anyone know what all the automatic trades are? has this been shorted recently?

Cheers

Korg