BASF makes roughly $850 million takeover bid for Pronova BioPharma

German company hopes that growth in health supplement and nutraceuticals sector will help balance out the more volatile business in its chemicals and plastics operations

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LUDWIGSHAFEN, Germany—BASF has announced plans to acquire Lysaker, Norway-based PronovaBioPharma ASA, which it describes as "a pioneer in thefield of research, development and manufacturing of omega-3fatty acids," for an enterprise value of approximately $850 million.
The offer represents a premium of 24 percent above the volume-weighted average share price for Pronova's shares in the sixmonths prior to announcement of the public takeover offer.
BASF says that it has reached an agreement with Pronova tomake a recommended voluntary public takeover offer to Pronova'sshareholders. Both the board of directors of Pronova and themanagement unanimously support the offer and recommendits acceptance.
In addition, BASF has obtained irrevocable pre-acceptancecommitments for approximately 60 percent of Pronova's share capital;including the 50-percent stake held by majority shareholders HerkulesPrivate Equity Fund (held through its funds Herkules PrivateEquity (Jersey-I) L.P. and Herkules Private Equity (Jersey-II)L.P.), an approximately 9.1-percent stake indirectly controlled byinvestment firms Kistefos AS and Kistefos Investment AS and 0.3 percent that is held by members of the board of directors and managementof Pronova.
"The intended acquisition will significantly strengthen our positionin the fast-growing and highly profitable market for omega-3 fattyacids. We want to combine the global market reach andexperience of BASF with the know-how of Pronova in omega-3fatty acids," said Michael Heinz, member of the board of executive directors of BASF and responsible for thePerformance Products segment, which includes the Nutrition &Health division.
BASF notes that highly concentrated omega-3 fatty acids are "a globally growingmarket, driven by an increasing consumer awareness of omega-3fatty acids health benefits. With the acquisition of Pronova, BASFwill immediately achieve a leading position in the global market foromega-3 fatty acids. Pronova's active pharmaceutical ingredientsare used to treat cardiovascular diseases such as post-myocardialinfarction. In nutritional applications, including dietarysupplements, there is a strong body of evidence supporting abroad range of positive health benefits through omega-3 fattyacids, for example, in the areas of cognitive development or hearthealth."

Pronova supplies the omega-3-based cardiovascular medication Lovaza to GlaxoSmithKline, though a spokesperson for the company has said an acquisition of Pronova would not affect GSK's commercialization of Lovaza in the United States.

Coverage of the offer by Reuters quotes Carl Erik Sando of Odin Fund Management, whichowns a 4.7-percent stake in Pronova, as saying that "The bid starts at the low end of what would beconsidered normal. One could imagine getting a higherprice."

With Sando and various market-watchers suggesting the BASF offer may be a low-ball bid, some are speculating that other companies might yet emerge with better offers.

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