Novartis still chasing Slovenian drug firm

Novartis' initial offer for the Slovenian drugs group Lek was rejected by the company's shareholders.

Swiss pharmaceutical giant Novartis still wants to acquire Slovenian drugs group Lek, despite its takeover bid being rejected by shareholders as too cheap.

This content was published on September 29, 2002 minutes

Novartis officially launched its new bid for the generic drugs manufacturer on Saturday.

The Swiss drug maker is offering 95,000 Slovenian tolars ($406) per share in cash.

"We carefully considered the interests of Lek's shareholders, employees and management and believe the offer is full and fair both to the shareholders and the company," said Christian Seiwald, head of Novartis Generics.

"It enables us to support Lek's investment program and provides a good platform for our combined growth and expansion."

Novartis' bid is conditional on the company receiving acceptances for at least 51% of Lek's share capital. The offer is valid until October 28.

Lek shareholders attending an extraordinary meeting on Friday in the capital Ljubljana decided that the offer price was too low. They also refused to change company statutes limiting in a single shareholder to a maximum of 15 per cent of the voting rights.

Only 42 per cent of shareholders voted to accept the necessary statutory changes - well short of the required 75 per cent.

Perfect fit

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.

Lek shares and the Ljubljana stock exchange rose this week on hopes that a compromise deal between the two drug groups would be reached.

Justifying its ongoing bid, Novartis the Slovenian drug maker is a perfect fit for its own activities.

A takeover would enable 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.


Key facts

Novartis is still interested in acquiring 51 per cent of Lek despite initial rejection from shareholders.
Novartis is offering over $406 per share.
The offer will stand until the end of October.

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