* 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 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
"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
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
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.