P&G Bows to Wella Shareholder Rebels with $119 Million Offer

Procter & Gamble Co. bowed to the demands of rebel Wella investors on Monday, offering an extra 100 million euros ($119 million) to buy them out and finally take full control of the German hair care group. P&G, which holds most of Wella’s ordinary voting stock and about 80% of total share capital after last year’s 5.6- billion-euro takeover offer, said it had entered a domination and profit transfer agreement with Wella’s supervisory board.

Under the terms of the deal, P&G will offer 72.86 euros per share, which is 12% more than its last offer and 18% above the original tender bid made a year ago. Originally, some hold-out institutional investors refused P&G’s original offer, claiming the bid discriminated unfairly against owners of Wella’s non-voting preference shares, who were offered 61.5 euros per share. The bid was later upped to 65 euros, but that was still well short of the 92.25 euros received by owners of the largely family-held ordinary shares.

Others had since accused P&G of ignoring the interests of minority shareholders and pressed for the U.S. group to approve a domination agreement, which under German law requires the buyer to offer to mop up outstanding shares.

“I am very surprised at this and I welcome the news as it meets our demand for a domination agreement,” said one Wella shareholder to Reuters, who said he would need to talk to other minority investors before deciding whether or not to accept the offer. “The price seems a little bit low in my opinion, though,” he added. “I have always said the right price is above 80 euros.”

The new offer, if accepted by all shareholders, would cost P&G about 1 billion euros on top of the 4.65 billion it has paid for the stock it has secured so far, or about 100 million euros more than its final offer last year. “P&G believes the long-term growth and health of the Wella business is best served by retaining funds within the company to provide investment flexibility for future growth in new and existing markets,” the U.S. group said in an earlier statement.