(Reuters) - Belgian diaper maker Ontex (ONTEX.BR) has rejected a reduced bid from French private equity firm PAI Partners as undervaluing the company, sending its shares down as much as 22 percent on Monday.
Ontex said both sides now considered the matter closed. PAI was not immediately available to comment.
In July, PAI had lifted its offer for Ontex to 27.5 euros per share, or about 2.3 billion euros ($2.7 billion), after its initial proposal was rejected.
However, PAI said that offer was made on the basis of publicly available information and was conditional on an examination of Ontex’s books, which then started.
On Monday, Ontex said it had received a revised proposal from PAI that was below the private equity firm’s previous offer, without elaborating.
Shares of Ontex, which also makes feminine care and incontinence products, had fallen sharply before PAI emerged as a suitor, as the company grappled with problems in Brazil, rising input costs and increased competition.
Analysts see strong long-term growth prospects for hygiene products because of ageing populations and growing emerging market wealth, but Ontex and rivals including Procter & Gamble (PG.N) and Kimberly-Clark (KMB.N) in the United States have been hit by rising pulp prices at a time when intensified competition makes it harder to pass those costs on to customers.
Ontex’s shares were down 19 percent to 20.08 euros at 0845 GMT.
KBC Securities cut its target price for the stock to 22 euros from 27.50.
“We expect a negative stock price reaction today with the share probably returning to levels prior to the initial PAI interest (below 20 euros),” it said.
Ontex said it was reviewing options “to accelerate the delivery of value for the benefit of our shareholders.”
It expects the review to be completed by the end of the fourth quarter.
“We see the board’s statement as a strong vote of confidence in Ontex’s future”, KBC added.
($1 = 0.8613 euros)
Reporting by Camille Raynaud in Gdynia, Editing by Louise Heavens and Mark Potter