UPDATE 5-Mexico's Genomma Lab bids for Prestige Brands
* Genomma offers $16.60 per share, a 23 pct premium
* Deal valued at $834 mln, excluding Prestige debt
* Genomma due to report 4th-qtr results on Friday
MEXICO CITY, Feb 21 (Reuters) - Mexican pharmaceutical products company Genomma said on Tuesday it was offering to buy Prestige Brands Holdings Inc, the maker of Comet and Spic and Span cleaners, for $834 million in cash.
Mexico City-based Genomma said it was offering $16.60 cash per share for Prestige Brands, a premium of 23 percent over Prestige's closing share price on Feb. 17.
Shares in Genomma Lab fell 9 percent after the announcement, while Prestige shares soared 22 percent to $16.48.
The Mexican company, which is due to report fourth-quarter results on Friday, earned 795 million pesos ($62.72 million) in the first three quarters of 2011.
Genomma had 1.776 billion Mexican pesos ($140.12 million) in cash on hand at the end of the third quarter. The company did not say how it planned to finance the deal.
"We expect that we will obtain the necessary financing for the proposed transaction in an expeditious manner," Genomma said in a letter to Prestige.
Separately, New York-based Prestige, which also sells brands such as Clear Eyes contact lens solution and Compound W wart remover, said it will review the offer in consultation with its advisors.
"We are puzzled by Genomma Lab's decision to go public without any attempt to first engage in discussions with, or make a proposal to, the board of directors of Prestige Brands," the company said and advised its shareholders not to take any action on the offer.
Janney Capital Markets analyst John San Marco put a 50 percent chance on a deal closing, due to the lack of secure financing or a binding offer.
"We believe there's a lot that could go wrong closing the transaction," San Marco said.
The deal represents potential negatives for Genomma, which has done four acquisitions in 3-1/2 years, analysts said.
"The implication of the deal for Genomma is slightly negative in the short term from our point of view because of the increased leverage," Raquel Moscoso, analyst with Mexican bank Banorte Ixe, said in a report.
"In our opinion, the synergies from this deal are not clear," Moscoso wrote, adding that the market where Prestige sells its products has very different characteristics to Latin American markets.
Another worry is that Prestige might not accept the current offer and Genomma might have to raise its bid, analysts said.
"We are not sure that the deal value will be high enough for Prestige to want to sell, and so we are worried that there could be an additional increase above the original proposal," Moscoso added.
Genomma shares, which had been suspended pending news since early Monday, were down 9.4 percent late on Tuesday from Friday at 26.10 pesos.
Genomma did not return calls seeking comment.
- Tearful Thai PM urges protesters to take part in election
- Google bus blocked in San Francisco gentrification protest
- North Korea's "reign of terror" worries South's leader
- Chinese hackers spied on Europeans before G20 meeting: researcher
- Putin dissolves state news agency, tightens grip on Russia media