* Elliott says has seen reports that it may change its mind
* Says is bound to reject offer in current form
* Shares in Celesio down 0.4 pct
FRANKFURT, Dec 23 Hedge fund Elliott
International stood firm in rejecting U.S. wholesale drugs group
McKesson's $8.3 billion offer for European counterpart
Celesio on Monday, saying it was "irrevocably bound"
not to accept the bid at is stands.
Celesio management this month recommended its shareholders
accept the bid from McKesson, the largest wholesale seller of
drugs in the United States, which wants to expand abroad and
boost its purchasing power with pharma majors.
Germany-based Celesio supplies pharmacies across Europe and
owns Britain's Lloyds pharmacy chain. A combination with
McKesson would create a global group with annual sales of around
more than $150 billion and would be Germany's biggest healthcare
deal since drugmaker Bayer bought rival Schering in
McKesson's 23 euro-per-share cash bid represents a
43-percent premium over Celesio's share price prior to
speculation in June that majority owner Franz Haniel & Cie
might sell its stake.
Celesio shares were down 0.4 percent at 22.92 euros by 1409
GMT on Monday, implying scepticism among investors that the
wrangling will conclude with a far more attractive deal for
Celesio shareholders, who have until Jan. 9 to tender their
Elliott, run by U.S. investor Paul E. Singer, has spent
about 800 million euros ($1.09 billion) building a stake in
Celesio and already said this month it would not tender its
shares, calling upon McKesson to sweeten its offer.
"Elliott has seen reports suggesting that it will change its
mind and accept McKesson's offer. These reports are
categorically incorrect," Elliott said in a statement on Monday.
"To be absolutely clear, Elliott's final, binding decision is
not to accept McKesson's offer on its current terms."
Celesio declined to comment. A Germany-based spokesman for
San Francisco-based McKesson also declined to comment.
"NO GOING BACK"
Elliott has 25.16 percent of the voting rights in the
company, enough to block a deal that needs the support of
investors holding 75 percent of Celesio's shares.
"It looks as if Elliott is prepared to let the deal fall
through unless they get more money. Elliott has gone out on a
limb and it seems there's no going back now," a Frankfurt-based
McKesson and its closest U.S. rivals, AmerisourceBergen
and Cardinal Health, have all been looking to
expand outside their domestic market, where they command a
combined 95 percent share.
The bid valued Celesio including its debt at about 11 times
expected earnings before interest, taxes, depreciation and
amortization (EBITDA) for this year. That is in line with the
multiple that Walgreen Co paid for a 45 percent stake in
European pharmacy chain Alliance Boots last year.
Elliott has been strongly active in Germany this year,
having also built a large position in Kabel Deutschland
and aiming to sue bidder Vodafone for a
better price than was accepted by other shareholders, according
to people familiar with the matter.