Richter's takeover of Polpharma stalls

Hungarian drugmaker Richter Gedeon says that its previously-announced acquisition of Polpharma, the largest generic drugs group in Poland, for some $1.34 billion (Marketletter November 26, 2007), is unlikely to be completed, despite gaining clearance from the Polish competition authorities, the OPCC, earlier this month. The reason the deal has stalled is that the current majority owner of the Polish firm, Netherlands-based investment group Genefar, with which Richter also planned to merge, has withdrawn from the accord. This news saw the Hungarian company's share price fall as much as 8.6% in morning trading on July 8.

Genefar is controlled by the Starak family and, under the original terms, was to have a 26.75% stake of the enlarged company, with Jerzy Starak becoming deputy chairman of the Hungarian group's board. However, it seems that the Dutch investment firm advised Richter that it would not proceed with the deal under these terms.

Richter says that, although it remains ready to proceed to closing on the basis of the original agreement, it believes that the transaction is unlikely to be completed. In this event, the Hungarian company says it will take the necessary steps to enforce its claim for the break up penalty amounting to $40.0 million.