Major Dundee healthcare diagnostics firm Axis-Shield has given up its hostile takeover fight despite insisting a new £235 million offer ”fundamentally” undervalues the business.
The company, which is based in Dundee Technology Park, had spent months fending off the aggressive overtures of US-based Alere but a renewed cash offer of 470p per share 10p higher than previous forced the board’s hand.
The firm said the decision to recommend Alere’s offer was made in light of the current volatile economic backdrop and following consultation with major investors.
Julie Simmonds, of market analysts Collins Stewart, said Alere had played a ”very clever game” and was acquiring Axis-Shield at a bargain price.
She said the firm was simply ”bowing to the inevitable” because of the threat of Axis-Shield losing its London Stock Exchange listing a possibility if 75% of the share capital was acquired by Alere.
She said: ”If you go back a couple of weeks, it looked like Alere weren’t going to be able to secure this deal but by changing the conditions they played a very clever game.
”They (the Axis-Shield board) were in a difficult situation. Potentially if they had opened up discussions with Alere at an earlier stage and given them more information then they may have been able to get a higher price, but there was no guarantee that would happen.
”I think if the markets had been more positive then Alere would have been unlikely to get away with this sort of price. You can argue the markets have fallen but if you look at what this could potentially do for Alere then they’ve certainly got themselves a bargain.”
Axis-Shield, which started off life as Shield Diagnostics in Dundee in 1993, employs more than 500 people at its various sites in the UK, Scandinavia, Switzerland and Germany.
The group has developed its own range of in-vitro healthcare diagnostic systems for conditions including diabetes, rheumatoid arthritis and heart disease and also sells third-party products and medical devices.
In 2010, the company’s turnover topped £101m an increase from £96.7m in 2009 and the first time it had broken the £100m barrier although pre-tax profits dropped from £11m to approximately £7.5m in the same period.
In their statement on Thursday, Axis-Shield’s board recommended that shareholders accepted Alere’s renewed offer, which came with a revised acceptance condition of 50%.
It warned of the ”probability” that a sufficient number of shareholders would accept Alere’s offer so as to push its holding above 75%, the threshold at which the company’s public stock listing would be cancelled.
The statement said: ”In such circumstances, Axis-Shield shareholders would no longer be provided the protections available to them under the listing rules; the liquidity and marketability of Axis-Shield shares could be significantly adversely affected, and Axis-Shield shareholders’ ability to dispose of their Axis-Shield shares following closure of the revised offer will be materially restricted.
”While the board of Axis-Shield considers the offer to undervalue Axis-Shield fundamentally, for the reasons stated, it is now recommending that shareholders accept the offer.”
Alere, which is active in the health diagnostics marketplace in 25 countries and and already has Scottish-based interests, said its revised offer valued the firm at £235m.
It said: ”The board of Alere announces that it has reached agreement with the board of Axis-Shield on the terms of a recommended increased cash offer for the entire issued, and to be issued, share capital of Axis-Shield.
”Under the terms of the revised offer, Axis-Shield shareholders will receive 470 pence in cash for each Axis-Shield Share, valuing the entire existing issued share capital of Axis-Shield at approximately £235 million.”
The takeover panel has been notified of the new offer and the deadline for shareholder acceptance of Alere’s new offer has been extended until October 24.