BERLIN — Henkel’s addition to the bidding battle for Wella Group has heated the simmering speculation about a possible Procter & Gamble takeover of the hair care giant to the boiling point.
This story first appeared in the March 12, 2003 issue of WWD. Subscribe Today.
On Tuesday, a leading German financial daily quoted a manager involved in the negotiations as saying: “A [P&G] offer is just a matter of days [away].” The paper further stated that most of the family controlling Wella is “now ready to sell.”
The surprise disclosure late Monday that Henkel had acquired 6.86 percent of Wella — 4.99 percent of ordinary shares and 10.38 percent of preferred shares — added an unexpected twist. It is not known when Henkel, which reportedly made an informal $5.85 billion bid for Wella last October, acquired the shares. All dollar figures are calculated from the euro at the current exchange rate of about $1.10 per euro.
A Henkel spokeswoman would not add to the official statement regarding the Wella stake, which simply described it as “an interesting investment in light of current stock market conditions.”
The descendants of Wella’s founder Franz Ströher hold about 78 percent of the company. In the past, they have been uninterested in a sale, but sources say their outlook has changed in recent weeks. The Ströher descendants fall into four family groups — Ströher, Ebert, Sander and Pohl — and observers now suggest that it is only the Ströhers, who control 25 percent of the stake, who are resisting a sale.
“There’s a big likelihood that P&G will make an offer in the next days,” a German analyst told WWD. “There seems to be a willingness to sell, and it’s just a question of money.” He said Wella would probably carry a $6.6 billion price tag, more than a 50 percent premium over Wella’s current market value of $4.2 billion.
“There’s a chance they can get the whole family to sell,” he continued. “And should the Ströher group hold out with their 25 percent, P&G would still have a majority.”
During the first nine months of 2002, Wella’s sales rose 6.3 percent to $2.66 billion, about 20 percent attributable to cosmetics and fragrances. Final figures for the year are expected April 8.
“The buzz is that a deal is definitely on the way,” said another market analyst in Frankfurt. That is, he added, “if P&G really wants Wella. I’m not clearly convinced that they do.” In his view, Wella is probably P&G’s second choice after Beiersdorf. However, Beiersdorf’s complicated share structure has so far nixed any takeover deal. Munich-based financial services conglomerate Allianz was shopping around its 43.6 percent Beiersdorf stake, but German coffee company Tchibo’s 30 percent “blocking minority” presented a seemingly unsurmountable obstacle.
The analyst suggested that P&G’s moves with Wella could be an attempt to jolt Allianz into action, with the message: “Hey, this is your last chance to sell,” he said.
As for Henkel’s 6.86 percent stake, he said that in Henkel’s talks with Wella’s majority shareholders, Henkel may have discovered that the family was less opposed to sell than previously. “It may have seemed to make sense to hold a stake as a springboard to a future offer, or knowing that a bid was coming — a way of making a nice capital gain.”
But it is unthinkable, he stated, that Henkel could outbid P&G should a bidding war ensue.