Dechra Pharmaceuticals surges on £4.6bn takeover approach

14th Apr 2023 10:00

(Sharecast News) - Shares in Dechra Pharmaceuticals surged on Friday after it announced late on Thursday that it was in talks with Swedish private equity firm EQT about a possible £4.6bn takeover.

Under the terms of the offer, Dechra shareholders would receive 4,070p per share in cash. This is a 47% premium to the closing share price on Thursday.

Dechra said it's being discussed that the private equities investment department of the Abu Dhabi Investment Authority (ADIA) would be a co-investor with EQT.

Having considered the offer with its financial adviser, Investec, the veterinary pharmaceuticals group said it would be prepared to recommend the deal to shareholders should EQT announce a firm intention to make an offer.

It added that there can be no certainty any firm offer will be made and that a further announcement will be made as appropriate.

Under takeover rules, EQT has until 11 May to either announce a firm intention to make an offer or walk away.

At 1000 BST, the shares were up 36% at 3,766.50p.

Victoria Scholar, head of investment at Interactive Investor, said: "Dechra fared extremely well during the pet boom during the pandemic as a strong stay-at-home stock. However it has struggled since, issuing a profit warning in February, citing unpredictable trading conditions.

"Although shares in Dechra are soaring today on the M&A speculation, the stock is not fully pricing in the all-cash off suggesting there is still some uncertainty about whether the deal will cross the line. Before today's surge, shares had fallen sharply over the last year from 3,822p in April 2022 to 2800p by Thursday's close."