An attempt by the Swiss pharmaceutical giant Novartis to increase its stake in the eastern European market has collapsed after the Slovenian drugs group Lek rejected a takeover bid.This content was published on September 27, 2002 - 14:00
Lek shareholders attending an extraordinary meeting in the capital Ljubljana decided that the offer price was too low.
Only 42 per cent of shareholders voted to accept the $800 million (SFr1.2 billion) bid - well short of the required 75 per cent.
The decision is being viewed as a major setback for Novartis. A takeover would have enabled the Basel-based company to expand its capacity to manufacture generic versions of the Augmentin antibiotic developed by the British drug giant, GlaxoSmithKline.
Two months ago the Swiss group's generic drug unit, Geneva Pharmaceuticals, started selling a copy of GlaxoSmithKline's drug in the United States. However, sales have been constrained by a lack of manufacturing capacity.
"We are very disappointed about the decision," Mark Hill, a Novartis spokesman, told swissinfo.
Lek's chief executive, Metod Dragonja, also expressed his disappointment, arguing that the project with Novartis would have strengthened his company's position.
"The Slovenian environment is not ready for such projects, but at the same time the blame also lies on the conservative bid price," said Dragonja.
In a last minute effort to salvage the deal, Novartis raised its bid from 95,000 Slovenian Tolar (SFr624) to 98,000 (SFr643) per share on Thursday, even though the company had repeatedly said its original offer was non-negotiable.
But the company's main shareholders, Kapitalska Druzba (KAD) and Odskodninska Druzba (SOD), which together hold a 27.5 per cent stake in Lek, maintained that the shares were worth 115,000 Tolar (SFr755) each.
It remains unclear what Novartis's next move will be given the shareholders' stance.
Stane Valant of Nacionalna Financna Druzby, an investment firm that has a small stake in Lek, said it was very likely that Novartis would pursue the deal.
"Considering the interest Novartis has shown in Lek so far, I expect negotiations will continue," said Valant.
Lek shares and the Ljubljana stock exchange rose this week on hopes that a compromise deal between the two drug groups would be reached.
Novartis's $800 million takeover bid for the Slovenian drugs group Lek has been rejected.
Only 42 per cent of Lek's shareholders were in favour of the takeover bid.
In a last minute effort to salvage the deal, Novartis raised its bid from SFr624 to SFr643 per share.
This article was automatically imported from our old content management system. If you see any display errors, please let us know: email@example.com