The acquisition of UK pharmaceutical company Goldshield Group plc (LSE: GSD) by Israel's Fuhrer family is not a done deal. Goldshied today made an announcement that implies that a struggle for control of the company is in the offing between AIT Investments Ltd., owned by the Fuhrers, and Goldshields' senior management. The Fuhrer family owns Israeli drug distributor NeoPharm Ltd.
On September 18, Goldshield announced that AIT, a company that the Fuhrer's founded for the purpose of the takeover, would pay ₤4.40 per share for Goldshield, at a company value of £162.1 million. Goldshield's share price had risen by 87% from the beginning of the year to the date of the announcement.
Today, Goldshield announced that its management team, "comprising the executive directors of Goldshield, Rakesh Patel, Kirti Patel, Ram Swamy, and Ajay Patel notes the announcement on 18 September 2009 by AIT Investments Ltd. of a recommended offer for Goldshield."
"The AIT announcement made known the interest of the Management Team in pursuing its own possible offer for Goldshield and the Management Team can confirm that it has completed its due diligence, is in detailed discussions with its selected providers of debt and equity finance and is close to reaching a conclusion with regard to financing the terms of any possible offer."
In other words, a struggle for control of Goldshield has developed between the Fuhrers, who have the wherewithal to buy the company, and the company's executives, who will have to raise the capital and debt needed to buy it, and are motivated to do so.
Rakesh Patel is CEO of Goldshield, Ajay Patel is head of the company's Global Consumer Health Division, Ram Swamy is the CFO, and Kirti Patel is a senior director.
The struggle at Goldshield is between its executives and its independent directors, who recommend AIT's cash offer for the company. Goldshield's independent directors are Nick Woollacott (who heads the board's audit committee), and Paul Edwards (who head's the board's compensation committee).
Goldshield's shareholders will have to approve the deal with AIT. Today's announcement added, "The Management Team urges shareholders to take no action in respect of the offer by AIT."
The announcement stated that the management team together owns 9.62% of the company, and that it "is considering its position and will make a further announcement if appropriate in due course."
Goldshield's largest shareholder is Schroder Investment Management, with a 29.4% stake. Barclays Bank plc (LSE: BARC) owns 6.9%.
Goldshield produces and sells over-the-counter drugs and nutritional supplements. Ajit Patel, Kirti Patel, and Shane Gogerly founded the company 18 years ago. Until its IPO in 1998, the company sole financing round was ₤1.8 million.
According to the September 18 announcement, AIT's cash offer of ₤4.40 represents a 36% premium over Goldshield's share price of ₤3.23 on June 23, the day before it announced that it had received approaches concerning a possible offer.
The September 18 announcement added, "It is expected that the former CEO of Goldshield, Ajit Patel, will also invest in AIT." Ajit Patel owns 4.8% of the company.
Goldshield's share rose 2.7% by midday today to ₤4.60, giving a market cap of ₤169 million.
Published by Globes [online], Israel business news - www.globes-online.com - on September 21, 2009
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