Bid battle for Lloyds resumes
UniChem launches fresh pounds 657m offer for chemists chain as the OFT moves to end price fixing on over-the-counter medicines
Saturday 19 October 1996
Gehe, the German pharmaceuticals group, said it was "evaluating" its position but was still interested in Lloyds. Dieter Kammerer, chairman of Gehe's management board, said: "We believe that UniChem would face significant risks in acquiring Lloyds Chemists, given the relative size of the companies."
The Lloyds Chemists board advised its shareholders to "take no action" on UniChem's offer. It said it noted Gehe's continuing interest. Lloyds Chemist shares increased by 17.5p to 521.5p, comfortably above UniChem's offer price. UniChem shares fell 9p to 249p.
The reopening of the 10-month bid saga was given added significance by the Government's move to end price controls on over-the-counter medicines following a long running campaign by Asda. UniChem shrugged off suggestions that the possible end of price fixing would harm its retail business, which operates under the Moss Chemists name. It said 88 per cent of its business was prescription medicines, which were unaffected by the announcement. Only 3 per cent of its remaining sales are over-the-counter medicines.
UniChem's offer is almost identical to its revised bid which lapsed in March. It is offering 16 new UniChem shares and 926p in cash for every 10 Lloyds Chemists shares held. The difference is that there is no underwritten cash alternative and no special dividend. UniChem already owns 9.9 per cent of Lloyds Chemists.
Gehe still has 21 days to submit a revised offer. Though Gehe has said Lloyds is now worth less due to the recent poor trading performance - it announced a 15 per cent profits drop to pounds 47m last week - analysts said UniChem's move may force it to bid higher.
Gehe criticised UniChem's offer, saying it ignored the fall in profits. It said the deal would dilute earnings in the first year and that reorganisation costs would be higher than originally forecast.
Justifying the renewed offer, UniChem's chief executive, Jeffrey Harris, said: "The core business of Lloyds Chemists is as valuable to us as it has ever been. I am confident that we can deliver what we have promised, including earnings enhancement after the first year."
The reorganisation costs, estimated at pounds 34m, are largely due to closing Lloyds' under-performing drugstore chain. Mr Harris said cost savings would be achieved through increased buying power, rationalisation of the distribution network and reduction of central overheads. These savings would contribute more than pounds 15m towards operating profits in the first year after the takeover and pounds 20m a year after that.
UniChem made its original pounds 650m offer for Lloyds in January. Gehe made a similar offer the following month. Both subsequently raised their offers but they lapsed in March when they were referred to the Monopolies and Mergers Commission. Both sides had to agree to sell seven wholesale warehouses.
- 1 BBC election debate: The one photo that summed up the whole 90-minute leaders debate
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 18th century sex toy found in 'toilet of sword fighting school' in Poland
- 4 'I wish my teacher knew...': Young students share their 'heartbreaking' worries in notes
- 5 Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
General Election 2015: David Cameron catching up in polls – but he badly needs a clear lead
South Africa xenophobic attacks: Shops looted and violence on streets of Johannesburg as foreigners are forced to hide in police stations
Earthworms rain down from skies over Norway, puzzling scientists
18th century sex toy found in 'toilet of sword fighting school' in Poland
'I wish my teacher knew...': Young students share their 'heartbreaking' worries in notes
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
Russian warships in English Channel 'to conduct anti-aircraft and anti-submarine military drills'
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...