CD&R Mulls Improved Offer for UDG Healthcare at $3.8 Billion

Clayton, Dubilier & Rice is considering raising its offer for UDG Healthcare Plc to about 2.7 billion pounds ($3.8 billion) after some of the Dublin-based company’s largest shareholders complained the previous bid was too low.

The increased price would be 1,080 pence a share, the companies said Friday, 3.3% above Thursday’s close and 5.6% higher than the offer made in May. If the bid is made, UDG said it intends to accept it.

Shares of UDG rose as much as 1.2% to 1,058 pence in early London trading.

The pace of health-care acquisitions has accelerated during the pandemic, and UDG, which provides a range of services to pharmaceutical customers in about 25 countries, said last month it’s supporting clients in bringing Covid-19 treatments and vaccines to market. The company hasn’t received any offers from other bidders, it said.

CD&R Mulls Boosting UDG Offer to 1,080P/Share: M&A Snapshot

Activist investor Elliott Investment Management built up a position in UDG amid rising shareholder criticism over the terms of the proposed takeover. Last month, UDG’s largest shareholder, Allianz Global Investors, said the initial offer was “opportunistic and undervalues UDG.” M&G Investments, a top five investor, also criticized the proposed sale.

The improved offer values UDG’s equity at about 2.7 billion pounds, according to Bloomberg calculations.

The opposition to the initial offer reflects a wider concern that private equity companies are taking advantage of lower market valuations owing to Brexit and the pandemic to try and buy firms for less than they are worth.

CD&R has also set its sights on WM Morrison Supermarkets Plc, making an approach with a proposed 5.5 billion-pound offer for Britain’s fourth-largest grocer earlier this month. The supermarket rejected it, however, and said it significantly undervalued the business.

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