* PPF aims to replace Zentiva management.
* EC gives conditional approval to Sanofi/Zentiva deal.
(Adds EC approval on Zentiva takeover)
By Jana Mlcochova
PRAGUE, Feb 4 (Reuters) - Czech investment group PPF has launched an attempt to replace the management of Zentiva ZNTVsp.PR, undermining a bid for the Czech generic drugs company by French Sanofi-Aventis (SASY.PA).
Zentiva said on Wednesday that PPF, its second largest shareholder after Sanofi, had asked a court to call a shareholder meeting at which PPF would propose firing the board and replacing several directors with its own nominees.
Zentiva said it would fight the legal action.
PPF said in a statement it had sent Zentiva a number of letters, urging it to convene the meeting, but to no avail.
“After exhausting all out-of-court measures available in their mutual communication with Zentiva board of directors, (PPF has) decided to submit a petition to the District Court in Amsterdam for authorisation to convene an extraordinary general meeting of shareholders,” PPF said.
Zentiva told Reuters in an email it received the PPF request but had not yet made a decision whether to call the meeting as it needed time to consider the request.
Its board, led by Chairman Jiri Michal, supports a Sanofi bid valuing the company at $2 billion, or 1,150 crowns a share.
On Wednesday, the European Commission said its approval of Sanofi’s proposed purchase of Zentiva was conditional on divesting 15 drugs in eastern Europe.
“Sanofi-Aventis (is) committed to divest fifteen drugs in the Czech Republic, the Slovak Republic, Romania, Bulgaria, Hungary and Estonia,” the Commission, which oversees competition in the 27-nation bloc, said in a statement.
Purchasing Zentiva would take Sanofi, whose top-selling drugs include blood-thinner Plavix and anti-thrombotic drug Lovenox, deeper into the field of generics, previously shunned by large pharmaceutical companies but now seen as an entry point to booming emerging markets.
“On the basis of all available information the board believes the legal proceedings that PPF has initiated are entirely without merit,” Zentiva said.
Zentiva shares ended down 1.3 percent at 1,119 crowns, while the main PX index .PX closed down 0.4 percent. Sanofi shares closed down 0.04 percent at 45.24 euros.
PPF, a closely held investment group controlled by financier Petr Kellner, had no immediate comment but said it would issue a statement later.
PPF has withdrawn its own 950 crowns a share offer for Zentiva but has otherwise not reacted to the Sanofi bid.
Sanofi owns 24.9 percent of Zentiva, while PPF controls a 24.3 percent stake, according to Zentiva, whose management holds 5.9 percent. Analysts said PPF may have wider control through other shareholders.
“It is probable that at this moment they control more than Sanofi and the management,” said Josef Nemy, an analyst at Komercni Banka.
“If they raise this demand, then probably they believe they will push it through.”
Sanofi’s bid is conditional on it acquiring a majority in Zentiva. Nemy said PPF’s move showed it was not interested in selling to Sanofi at 1,150 crowns.
“This fairly lowers the chance to get a majority (for Sanofi). So maybe it is a push from PPF how to increase the offer price,” Nemy said.
Zentiva is set to hold an extraordinary shareholder meeting on the Sanofi bid on Feb. 9. The bid expires on Feb. 20. The European Commission was due to release a review Sanofi’s offer on Wednesday.
Other Zentiva owners whose shares are in play include privately owned investment group J&T with 7.6 percent and Belviport Trading Ltd, a closely held firm with anonymous owners, with 10.06 percent.
PPF announced its acquisition of a part of J&T’s core business last week but a J&T spokesman said the group’s stake in Zentiva was not part of the deal. (Additional reporting by Foo Yun Chee; Editing by Jon Loades-Carter and Andrew Macdonald)