* McKesson preparing to offer concessions to Elliott
* Deadline for tender offer is Thursday night
* Celesio shares jump 4.3 percent to 23.40 euros
FRANKFURT, Jan 8 U.S. drugs wholesale group
McKesson is ready to offer concessions in talks with
hedge fund Elliott to save its planned acquisition of
German-based peer Celesio, three people familiar with
the deal said on Wednesday.
McKesson in October offered 23 euros per Celesio share in a
bid backed by Celesio's majority investor Franz Haniel & Cie
, seeking to forge a global leader in drugs
distribution to boost its bargaining power with pharmaceutical
Elliott subsequently splashed out roughly 800 million euros
($1.09 billion) on a Celesio stake large enough to block the
deal, and denounced the $8.3 billion bid as too
"McKesson is budging, they are working actively on a
solution," one of the people said. However, no agreement has yet
been reached in the negotiations between McKesson and Elliott,
the sources said.
If McKesson decided to up its bid, it could by the end of
Wednesday make a new tender offer valid for another two weeks.
Or, it could buy shares for a higher price on the open
market by Thursday, obliging it to pay the same price for those
shares tendered before the midnight Thursday deadline.
Celesio traded up 7.7 percent at 24.16 euros at 1502 GMT.
By Wednesday afternoon, shareholders had tendered only 2.54
percent of the share capital and the voting rights in Celesio on
a fully diluted basis.
McKesson has made its bid contingent on getting at least 75
percent of Celesio's shares, including those from convertible
Debt-ridden Haniel has been urging McKesson to make the
acquisition work and may even settle for a discount to any
sweetened offer to remaining shareholders, two people familiar
with the transaction said. Haniel declined to comment.
"A thought that has surfaced is that McKesson could pay
Haniel a slightly lower price for its 50 percent stake and offer
a premium to other shareholders," one of the sources said.
Haniel, a family-owned conglomerate which traces its roots
back to the 18th century, has been shedding assets to pay down
its net debt, which stood at 1.6 billion euros at end-September
2013, and to offset a massive writedown on its holding in German
retailer Metro in 2012.
Elliott has 25.16 percent of the voting rights in Celesio
but when shares from Celesio's two convertible bonds are taken
into account, the investor's voting stake is 22.7 percent, below
the 25 percent it would technically need to block the deal.
However, some funds, which track share indexes, cannot
tender their shares before completion of the deal and usually
another small percentage of a company's shares are held in
accounts, whose owners do not tender.
San Francisco-based McKesson was not immediately available
for comment outside business hours. Celesio and Elliott declined