Goldman mulls fresh offer for Warner Chilcott

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The Independent Online

A consortium headed by Goldman Sachs, which lost out in the £1.6bn bidding war for Warner Chilcott last week, is considering coming back with a higher offer for the women's healthcare company.

The consortium believes it could find the cash for an 875p-per-share bid because the dollar strengthened sharply at the end of last week and because it has been joined by one of the other failed US private equity bidders, The Carlyle Group.

Northern Ireland's Warner Chilcott, which changed its name from Galen this year, agreed an 862p-per-share bid from the private equity arms of Credit Suisse First Boston and JP Morgan, which valued the company at £1,615m. It has emerged that Goldman Sachs came back with a bid above 862p shortly after the deadline, but was told it was too late, that directors had tended stakes totalling 10.7 per cent of the company to CSFB and agreed to a £17m break fee.

John King, the chairman of Warner Chilcott, is set to walk away with £125m from the sale of his 7.7 per cent stake, while Geoffrey Elliott, the departing finance director, will net £46m.

Goldman Sachs will this week continue working on a bid of £1,640m, about 875p a share, but observers suggest it faces two big hurdles. The first is that the directors' agreement to tender their shares to CSFB is only waived if a rival bid of 887p or more emerges. The second, highly unusual and most serious, difficulty is that CSFB has been given two days to match any higher offer, in which case it would retain the recommendation of the board.

The Carlyle Group had previously been part of a consortium led by Bain Partners, which missed a deadline to submit bids last week. Bain is now in talks about investing in the CSFB bid vehicle.

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