US group opens door to rival Warner bidders

THE American private equity group that plans to buy Northern drug company Warner Chilcott for close to €2.3 billion has opened the door to rival bidders to be part of the takeover.

Waren Acquisition, the special purpose company set up by banking heavyweights JP Morgan and DLG Merchant Banking Partners, said it was in talks with Bain Capital and Thomas H Lee.

The two private equity firms were attached to one of the two bids that lost out earlier this week when the Warner Chilcott board said it would recommend the Waren bid to shareholders, valuing the company at €2.3 billion or £8.62 a share.

Waren said in a statement that the talks raised the possibility of private equity funds advised by both groups being included in the Warner Chilcott takeover. Davy said the news made it more likely that the Waren acquisition would succeed because it took a prospective rival bidder out of the race.

Davy analyst Jack Gorman said the last remaining consortium from the original list of bidders, which was headed by investment banking giant Goldman Sachs, would need to come up with a bid of £8.87 to reopen the race.

This would represent a 6% premium on its original offer of £8.37. Warner Chilcott shares fell 5p to close at £8.62 yesterday, after investors had driven the share price above the Waren offer level in anticipation of a further knockout bid to wrest control.

The share price remains more than 30% higher than its level in mid-September, when news of a potential takeover first emerged. The share price was boosted by the level of interest in the company among potential buyers, which analysts put down to the company's positive outlook and strong footholds in America.