Category: United States

Prestige Brands Holdings (PBH), a US healthcare and house cleaning products company, has moved to adopt a shareholder rights plan, following last week’s hostile takeover bid by Mexican pharmaceutical marketer Genomma Lab. The PBH board adopted the plan, a strategy better known as a “poison pill,” after Genomma offered to acquire the company’s outstanding shares at $16.60 per share. The aim is to “allow the board of directors adequate time and opportunity to explore, develop and consider any and all alternatives,” the company adds. A poison pill typically dilutes a buyer obtaining a certain percentage of a company, a move that prevents the acquirer from sidestepping a negotiation with a target’s board and dealing directly with shareholders. PBH has not made public the details of its shareholder agreement, but says it will expire after the 2013 annual meeting. Officials at Prestige Brands could not immediately offer additional details. Genomma Lab could not be reached for comment. Last week, Genomma unveiled an offer to shareholders of $834m for the company’s equity, as well as assuming $891m in debt. Overall, the deal implied 9.5x Ebitda, according to calculations by Janney Capital Markets, which deemed the transaction “dubious.”

A poor market reaction and a possible legal challenge confronted Mexican pharmaceutical marketer Genomma Lab following a bid to acquire Prestige Brands Holdings (PBH), a healthcare and house cleaning products company in the US. Genomma’s shares lost 9.41% Tuesday, following the announcement of an offer to pay $16.60 per common share, or $834m, for PBH. The acquisition would also mean assuming the company’s outstanding debt of $891m, according to Janney Capital Markets. Genomma made the offer to PBH’s board and also revealed the details publicly to Prestige shareholders, a move that has cast doubt on the amicable terms of the deal. Others question its thinking. “It doesn’t make sense. Their strategy is Mexico and Latin America. It’s difficult to see what they would bring to the table here,” says an equity analyst who covers Genomma. He notes that its US operations involve marketing its existing products to Hispanics, but managing Prestige’s brands would involve new products in a broader market with different characteristics. The offer represents a 23% premium over PBH’s closing price on Friday and is 47% higher than the average for the past three months, it says. “Our strong preference is to work with you to negotiate a mutually acceptable transaction and avoid unnecessary costs,” Genomma’s chief, Rodrigo Herrera Aspra, says in the note to PBH shareholders. Herrera adds that Genomma has already received “indications of interest” from banks willing to finance the acquisition. It expects the transaction could close in three weeks if both parties move quickly and willingly. However, Janney Capital Markets calls the transaction “dubious,” and estimates there is only a 50% chance the deal may actually go through, it says in a report. The offer represents an implied 9.5x Ebitda in the best case scenario, it notes. The transaction is also facing a potential class action litigation from apparently dissatisfied PBH shareholders. Law firm Faruqi & Faruqi, which claims to repre

Mexico’s Elektra has agreed to buy US payday loan company Advance America in a deal valued at $780m including assumed debt. The purchase marks the Grupo Salinas company’s first step into the financial sector in the US, home to a large Mexican community that sends remittances home to low-income households, which also make up the base of Elektra’s customers. Elektra has offered to pay $10.50 per each Advance America share, or $655.6m, a 33% premium over the $7.91 close the day before the announcement. The purchase is being financed using roughly $300m of Elektra’s own cash and $450m from dollar and peso-denominated debt, a spokesman adds. The company raised $150m in a reopening of its 2018 bonds at the end of January, and he says it plans to issue an additional $300m soon. The $780m price tag for Advance America represents an enterprise value to Ebitda multiple of 6.5x, taking the company’s only available Ebitda up to September 2011 of $120m. “Elektra is paying 1.2x the sales of its new subsidiary, a level that appears adequate considering its operations, the potential for synergies, and the strategic position that Elektra now has in the US,” Gaspar Quijano, an analyst at Vector Casa de Bolsa, tells LatinFinance. He describes the move as “surprising but positive.” The deal should not immediately affect Elektra’s ratings says Fitch, which currently rates the Mexican company’s debt at BB minus. That said, Fitch reckons Elektra’s debt leverage would briefly rise to 2.7x before settling back to 2.5x in the short term. Elektra retained Stephens as a financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison as legal counsel in the deal. Wells Fargo Securities and K&L Gates, served as financial and legal advisors to Advance America. Advance America operates 2,248 centers in the US, as well as limited operations in Canada and the UK.