German pharmaceutical giant Bayer AG apparently wants no part of a bidding war for Salt Lake City–based Schiff Nutrition International, which makes vitamins and nutritional supplements such as Airborne.
Trumped by a $1.4 billion bid by U.K. consumer products company the Reckitt Benckiser Group, Bayer said in a letter addressed to Schiff general counsel Scott Milsten on Monday that it has no plans to increase the $1.2 billion offer it made at the end of October to acquire Schiff.
Bayer’s signed agreement with Schiff valued the company at $34 per share, well below Reckitt’s assessment of $42 per share. Reckitt set a deadline last week for its cash proposal to expire on December 14.
Schiff’s agreement with Bayer included a clause allowing Schiff to accept unsolicited rival bids made within 30 days of signing, with the understanding that Schiff would pay Bayer a $22 million breakup fee. Bloomberg also reports that Schiff CEO Tarang Amin would have received a $5 million bonus as part of the agreement with Bayer, had that deal been completed by the end of the year.
In its letter to Schiff, Bayer maintains its belief that Schiff would make “a logical and strategic addition” to Bayer’s portfolio of consumer care products. Bayer blames its reluctance to increase its offer on an unwillingness to engage in a bidding war that “would result in a price outside Bayer’s set financial criteria.” Bayer added that it will continue to look to grow through strategic acquisitions.
As The Am Law Daily reported in October, Bayer was being represented by Sullivan & Cromwell as lead counsel on its agreement with Schiff, with New York–based M&A partner Matthew Hurd heading up the team. Jones Day, a frequent adviser to Bayer on antitrust litigation matters, was serving as the German company’s antitrust counsel on the agreement, with antitrust partner Phillip Proger leading that firm’s team.
Schiff is being represented in the sales process by a Latham & Watkins team led by corporate partners Tad Freese and Jamie Leigh. The company’s general counsel, Milsten, is a former Latham attorney.
The Am Law Daily reported last week that Reckitt hired Paul, Weiss, Rifkind, Wharton & Garrison as its legal counsel for the rival bid. Corporate partners Toby Myerson, Kelley Parker, and Steven Williams are leading the firm’s team.