SAO PAULO (Reuters) – The board of directors of Brazil’s pharmaceutical company Hypera has unanimously decided to reject rival EMS’s offer to merge, it said on Thursday, adding that the proposal “significantly” undervalued the firm.
A tie-up between Hypera and EMS would have created Brazil’s biggest drug manufacturer, with the former focusing on over-the-counter medications while the latter’s main business is generic drugs.
EMS’s proposal earlier this week came right after Hypera scrapped its 2024 outlook and announced a plan to optimize its working capital, including reducing the deadline for customers to pay for its products, which led its shares to plunge.
Still, Hypera said that its board of directors considered that EMS’s “unsolicited” offer to buy up to 20% of Hypera shares valuing them at 30 reais each, along with a stock swap, “significantly underestimates” Hypera’s valuation.
“After analyzing the proposal together with its external advisors, the board of directors unanimously decided to reject it without opening negotiations,” the company said in a securities filing.
It also mentioned that the board considered that the firms have different portfolios and corporate governance practices, noting that Hypera has been publicly traded since 2008 while EMS is a privately-owned family business.
Hypera’s largest shareholder, founder Joao Alves de Queiroz Filho, backed the board’s decision, saying in a letter released by the company that he is committed to supporting Hypera’s long-term strategic plan. He owns 21.4% of the firm.
(Reporting by Gabriel Araujo and Luana Maria Benedito)
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