By Michael Erman and Soyoung Kim
Nov 15 UK consumer and healthcare company
Reckitt Benckiser Group Plc made a rival $1.4 billion
offer for Schiff Nutrition International Inc on
Thursday, topping Bayer AG's agreed $1.2 billion deal
to acquire the U.S. vitamin maker.
Reckitt proposed to pay $42 for each Schiff share, a 23.5
percent premium over the $34 per share that Bayer, Germany's
biggest drugmaker, agreed to pay in late October.
Shares of Schiff Nutrition surged nearly 30 percent to $44
in after-hours trading on the New York Stock Exchange, higher
than Reckitt's rival offer and indicating investors expect the
bidding to go higher.
Reckitt, which sells consumer health, hygiene and home
products, said it will commence a tender offer on Friday to buy
the vitamin maker, in an effort to enter the $30 billion global
market for vitamins, minerals and supplements.
"When this offer was made by Bayer -- which was a bilateral
agreement and not a public auction process -- we knew that this
was an area we would be very interested in," Reckitt's Chief
Executive Officer Rakesh Kapoor told Reuters on Thursday.
"That's why we started to work and look at it once again to
see whether this would be attractive to our shareholders. Based
on our due diligence, we believe it is and that's why we've come
up with a strong offer."
Representatives for Bayer and Schiff could not be
immediately reached for comment. Schiff Chairman Eric Weider and
private equity firm TPG Capital controlled 85 percent of the
company's voting power, as of end-October.
Reckitt's offer of $42 per share also represents a premium
of nearly 24 percent to Schiff's shares close on Thursday. The
company said it is confident the deal will close by the
On Oct. 30, Bayer announced a $1.2 billion agreement to buy
Schiff, seeking stable sources of growth to complement its more
volatile prescription drugs business.
Under the terms of its deal with Bayer, Schiff is allowed to
entertain superior offers made in writing before Nov. 28. If it
decides to go with another offer, it would have to pay a $22
million breakup fee to Bayer.
Many pharmaceutical companies are keen to expand in
non-prescription drugs as a steadier, albeit less profitable,
counterweight to prescription medicines, where there are risks
of, for example, clinical trial failures and patent expiries.
Reckitt sells a range of household and personal care
products, with everything from dishwashers and detergents to
anti-acne creams and condoms in its portfolio.
Reckitt, which would fund the deal with existing facilities,
expects it to immediately add to its earnings on an adjusted
Morgan Stanley & Co is acting as financial adviser to
Reckitt, with Paul, Weiss, Rifkind, Wharton & Garrison LLP
serving as legal adviser.