Genomma announces $834 million proposal to acquire Prestige
MEXICO CITY—Genomma Lab Internacional, S.A.B. de C.V. has announced the submission of a non-binding proposal to acquire all outstanding shares of Prestige Brands Holdings, Inc. common stock for $16.60 per share in cash, for a total value of approximately $834 million, not including Prestige’s net debt. The proposal represents a 23 percent premium over Prestige’s closing stock price on Feb. 17 and a 47 percent premium over the three-month historical average of the share price as of Feb. 17.
The proposal was delivered to the Chairman and CEO of Prestige, Matthew M. Mannelly, in a letter from Rodrigo Herrera Aspra, CEO and Chairman of Genomma. Genomma’s board unanimously supports the proposal, which is subject to due diligence, the negotiation of definitive documentation and customary corporate and regulatory approvals.
“We believe this is an extremely compelling offer with undeniable strategic and industrial logic, and we are confident that your stockholders will find it extremely attractive. We believe that bringing together our two highly complementary companies would create substantial value. As part of this uniquely compelling combination, Prestige would be well positioned to achieve higher growth than it could on a stand-alone basis,” Aspra said in the letter.
Genomma’s letter noted that its decision to make the proposal known to Prestige’s shareholders was based on “the unique opportunity presented by our proposal for your shareholders to realize full and immediate value.” It pointed out that the offer price represents “the highest price that [Prestige’s] stock has reached since June 2005.”
Aspra added that Genomma is very serious about the proposal and is “prepared to proceed expeditiously and, with your cooperation, believe we can be in position to announce a definitive agreement within two to three weeks.” The company strongly prefers to negotiate a “mutually acceptable transaction and avoid unnecessary costs,” he continued, and is ready at any time to meet for discussions as they believe “time is of the essence.”
“We have a high regard for your operations, management and talented employees, and we are mindful that you and your management team have contributed greatly to Prestige's success. Genomma contemplates continued employment of Prestige's management and employees following the consummation of a transaction,” he said.
In response to the proposal, Prestige announced that it would review the letter and respond in due course, though the company noted that it was “puzzled” by Genomma’s approach.
“The ‘offer’ described in the letter is highly conditional, requiring, among other things, due diligence, significant financing and Genomma Lab shareholder approval,” Prestige noted in a press release. “Given the extensive conditionality, combined with the absence of detail and the expressed preference for a negotiated transaction, 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 advises shareholders that they need not take any action at this time in response to Genomma Lab’s letter.”
Prestige markets and distributes brand-name OTC products in a variety of areas, including cold, allergy, sinus, oral, eye and skin care. Some of its brands include Chloraseptic, Luden’s, Dramamine, Beano and Clear Eyes.