Minority Shareholders Incommode Sanofi-Aventis Zentiva shares exceed mandatory takeover bid price on BSE

• Only 0.0059% of the targeted stock have been subscribed so far within the mandatory takeover bid

• Minority shareholders want double the price

Stefania Ciocirlan

Although a mandatory takeover bid for 25% of the shares issued by Zentiva - Bucharest (BSE:SCD) has been in progress on the Bucharest Stock Exchange (BSE) for nearly one month, shares in the drug producer are being traded for a higher price than what the majority shareholder is offering. Zentiva stock peaked at 0.715 RON/share on Friday, by 2.14% more than the best offer Sanofi-Aventis is ready to make within the takeover bid due to end on 22 September.

The situation would be more or less logical if the takeover bid was (almost) fully subscribed and the bidder had to buy stock directly from the minority shareholders refusing to accept the mandatory takeover bid. However, this is definitely not the case, as the current numbers of the bid speak for themselves: only 6,200 SCD shares equal to 0.0059% of the targeted stock have been subscribed since the bid started three weeks ago.

Notwithstanding the mandatory takeover bid, some 11.89 million SCD shares, equal to 11.36% of stock target that the French-based majority shareholder would like to secure has changed hands on the Bucharest Stock Exchange in the meantime. "Some of the investors are probably not satisfied with the price of the bid and are hoping to obtain a better value for their stock in the event that the company is de-listed," Marcel Murgoci, Trading Manager with the brokerage firm Estinvest told BURSA.

The 7 RON/share offered by Sanofi-Aventis displeased some of the minority shareholders, who claimed that this did not reflect the real value of the company and was not even close to their expectations, according to a letter sent to the bidder on 26 August.

The respective shareholders made a parallel evaluation of the company considering, among others, the price of 1.37 RON/share paid by Zentiva NV for 99.7 million shares in Sicomed during an initial public offering organized at the end of 2005. The shareholders concluded that the minimum "reasonable" price of the mandatory takeover bid should be 1.37 RON/share.

"The price they are offering is exaggeratedly low. If they plan to de-list the company, the majority shareholder must offer more," Daniel Iancu, a shareholder in Zentiva Romania, told BURSA. He believes that the mandatory takeover bid launched by Sanofi-Aventis for 0.7 RON/share does not stand a chance.

"Not even 0.1% of the stock targeted by the majority shareholder will be subscribed. Those who considered taking the 0.7 RON offered to them can now get more than that on the free market and enjoy the advantage of being paid immediately," Iancu added.

Sanofi-Aventis Europe indirectly holds 74.91% in Zentiva Romania and on 12 August initiated a public takeover bid for the remainder of the SCD stock for an aggregate 73.23 million RON. The bid is brokered by BRD Societe Generale and is aimed at 104.62 million shares.

The majority shareholder in Zentiva has announced plans to ask minority shareholders to exit and then de-list the company from the Bucharest Stock Exchange, if their total holding in the company exceeds 95% after the mandatory takeover bid.