UniChem set to renew contest for Lloyds Chemists

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The Independent Online
The takeover fight between UniChem and Gehe for control of Lloyds Chemists, the second biggest pharmacy chain in the UK, is set to be renewed in the middle of next month.

UniChem said yesterday, as it announced a near 16 per cent rise in interim profits to pounds 25m, that it had completed its preparations, by handing over a list of British companies interested in buying six of Lloyds warehouses to the Office of Fair Trading. Gehe, the German group, said it would hand over its own list of potential buyers for the warehouses next week.

The competition authorities have ruled that neither company can rebid unless the warehouses are sold. The condition was imposed following a Monopolies and Mergers Commission investigation into Gehe's and UniChem's original takeover bids earlier this year.

UniChem is keen to get its new takeover bid underway. Jeff Harris, its chief executive, said: "We believe this process should be speeded up. We found a number of potential buyers for the warehouses on our own as well as Lloyds suggesting some."

Gehe, however, is relying on the buyers identified by Lloyds for the warehouses. "At the moment we are examining the prospective buyers suggested by Lloyds. This process will be finished by next week and we will then go with this list to the OFT," said the Gehe chief Dieter Kaemmerer.

Both rival suitors said that the sale of the warehouses was a side issue, and had little bearing on the price of a fresh takeover offer. "The warehouses are not valuable. I don't think that their sale will make a lot of money. We would have planned to sell them over a longer period of time anyway," said Mr Harris.

Gehe and UniChem expect that the OFT will not make its recommendation about whether the two companies can bid until early next month. The final green light for any renewed takeover bids will be at the behest of the Department of Trade and Industry.

Mr Harris yesterday pointed out that strategically Lloyds would still make a very good acquisition for UniChem. "We take a long-term strategic view in the valuing of Lloyds Chemists."

The poor performance of Lloyds during the last months - since the beginning of the year the results went down nearly by 20 per cent - doesn't influence UniChem's valuation of Lloyds. Mr Harris said: "We don't understand the reasoning for a lower price. The conditions are more or less still the same as in February. What we are interested in are their 920 pharmacies. That is what is of value to us and not the fact that Lloyds might be in a difficult period due to management problems."

Gehe, though, takes a different view. It is questioning whether Lloyds is still worth the pounds 650m it bid at the beginning of the year. Even so, Mr Kaemmerer said: "Our interest in the acquisition of Lloyds is as strong as ever. I don't think that even a less profitable sale of the warehouses will influence our determination."

Analysts expect that Gehe's offer will be all cash, while UniChem's offer will be a mixture of cash and shares.

UniChem's turnover in the six months to end-June increased by 3 per cent to pounds 718.6m. The interim dividend is being raised 11 per cent to 3p. Its shares rose by 2.5p to 259p, while Lloyds' advanced by 5p to 503.5p.

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