Key Takeaways
- • Hedge fund Palliser Capital is leading shareholder opposition to CVC and GBL's €51.29-per-share take-private offer for Italian pharmaceutical company Recordati, valuing the deal at approximately €10.7 billion and triggering delisting from Euronext Milan.
- • Palliser and opposing minority shareholders contend the offer undervalues the company and characterize the transaction as "deeply unfair," citing approval by non-independent directors with conflicts of interest while all four independent board members voted against the deal on July 15.
- • The consortium controls 46.82% of Recordati through Rossini (a major shareholder owned by CVC), and the takeover requires a two-thirds qualified majority to proceed, with a mandatory squeeze-out triggered if acceptances exceed 90% of share capital.
- • Dissenting shareholders have demanded the offer be raised to no less than €60 per share; Recordati's stock traded at €52.25 at the time of reporting, above the bid price.
- • Italy's securities regulator CONSOB cleared the transaction on July 8, and the tender period commenced in early September, with a mid-October closing deadline.
Summary
Recordati, an Italian pharmaceutical group, faces a contentious take-private bid from private equity consortium CVC and GBL at €51.29 per share, valuing the company at approximately €10.7 billion. The transaction, announced in May, has triggered organized shareholder resistance led by London-based hedge fund Palliser Capital, which characterizes the offer as a "lowball" proposal that unfairly disadvantages minority shareholders.
At the core of the dispute lies governance structure and valuation. Palliser argues that the deal was engineered through approval by non-independent directors with material conflicts of interest, while simultaneously facing unanimous opposition from all four independent board members who voted against the transaction at a July 15 board meeting. The consortium's control position appears substantial: CVC owns 46.82% of Recordati through its control of major shareholder Rossini, which has committed all holdings to support the bid. This structural advantage has allowed deal proponents to secure approval from what Palliser characterizes as a "slim majority" of non-independent directors.
Opposing shareholders have demanded the offer be raised to a minimum of €60 per share, compared to the current bid of €51.29. The stock price at the time of reporting stood at €52.25, trading above the offer price and suggesting market skepticism regarding deal certainty. Italy's securities market regulator CONSOB approved the transaction on July 8, clearing a regulatory hurdle, but this clearance has not quelled shareholder concerns. The tender period commenced in early September and is scheduled to close in mid-October.
The transaction structure requires the consortium's Respighi BidCo vehicle to secure at least a two-thirds qualified majority of voting stock for the deal to proceed. A mandatory squeeze-out is triggered if acceptances exceed 90% of total share capital, providing a potential path to complete delisting from Euronext Milan. The bid's conditional structure and the organized opposition from institutional shareholders suggest the outcome remains contested, with final acceptance rates during the October deadline likely to prove decisive.
At the core of the dispute lies governance structure and valuation. Palliser argues that the deal was engineered through approval by non-independent directors with material conflicts of interest, while simultaneously facing unanimous opposition from all four independent board members who voted against the transaction at a July 15 board meeting. The consortium's control position appears substantial: CVC owns 46.82% of Recordati through its control of major shareholder Rossini, which has committed all holdings to support the bid. This structural advantage has allowed deal proponents to secure approval from what Palliser characterizes as a "slim majority" of non-independent directors.
Opposing shareholders have demanded the offer be raised to a minimum of €60 per share, compared to the current bid of €51.29. The stock price at the time of reporting stood at €52.25, trading above the offer price and suggesting market skepticism regarding deal certainty. Italy's securities market regulator CONSOB approved the transaction on July 8, clearing a regulatory hurdle, but this clearance has not quelled shareholder concerns. The tender period commenced in early September and is scheduled to close in mid-October.
The transaction structure requires the consortium's Respighi BidCo vehicle to secure at least a two-thirds qualified majority of voting stock for the deal to proceed. A mandatory squeeze-out is triggered if acceptances exceed 90% of total share capital, providing a potential path to complete delisting from Euronext Milan. The bid's conditional structure and the organized opposition from institutional shareholders suggest the outcome remains contested, with final acceptance rates during the October deadline likely to prove decisive.
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