Company seeks better terms to consider sitting down with competitor, source says.
Pharmaceutical company Hypera has rejected a merger proposal from EMS, which was made on Monday. In addition to considering that the offered price “significantly’ undervalues the company — a move that was anticipated — the board of directors highlighted that it does not see alignment between the companies’ product portfolios or corporate cultures. The major shareholders, João Alves de Queiroz Filho and Mexico’s Maiorem, also released a letter expressing their “complete agreement” with the board’s decision.
“EMS’s product portfolio, which is substantially focused on generic medicines, does not align with the segments that Hypera considers strategic,”
the company said in a statement.
“Furthermore, Hypera and EMS have entirely different organizational cultures and corporate governance practices. Hypera has been a publicly traded company since 2008, with a broad shareholder base, while EMS is a privately held, family-owned business.”
In addition to rejecting the offer, the company said it has not entered into discussions. To engage in talks, EMS will have to put new terms on the table about the exchange relationship and the governance of the resulting company, a source said. By making the private negotiations public, the bidder was trying to put pressure on that debate, a Hypera-affiliated executive said.
The proposal was to acquire up to 20% of Hypera’s shares for R$30—a 39% premium at the time. The rest would be exchanged for shares in a ratio that would give EMS control of at least 60% and up to 70%, depending on compliance with the tender offer.
Although Hypera had shown no interest in EMS’s portfolio, the two companies had been discussing a merger for months. Analysts had speculated that Hypera was unlikely to easily agree to the deal.
“Given that the discussion of a possible M&A between the two companies has already taken place in the past, when Hypera was much better valued, we believe that it is not obvious that the public offer of R$ 30 per share will be accepted,”
said Itaú BBA in a report published on Tuesday.
Source: Valor International