Elliott to Challenge P&G’s Wella Bid in Court

With just 48 hours for Procter & Gamble to mop up remaining Wella shares, lawyers for a hedge fund opposing the deal said on Wednesday their case would be heard by a Frankfurt court next week, according to a Reuters report.

“We have received a summons and the hearing is set for June 26,” Gerhard Kaiser, a partner at the law firm Dechert LLP told Reuters.

Disgruntled preference shareholders say they have been unfairly treated in P&G’s 5.6 billion euro ($6.6 billion) takeover of Wella because they are being offered 30% less than ordinary shareholders. Mr. Kaiser, who is acting for U.S. hedge fund Elliott Associates, said it did not matter that the case was being heard after P&G’s tender is due to expire at 2200 GMT on June 20.

“If the court carries our motion it would still bring down the entire bid altogether, unless P&G notches up the price for the non-voting equity shares. Then the flaws in the deal would be remedied,” Mr. Kaiser said.

Elliott, which last month failed to get a preliminary injunction to hold up the deal but insisted the door to legal action remained open, claims German financial watchdog, BaFin, was wrong to approve the deal. “We think that we can infer from the law that we have to get the same price as the family. That is 92.25 euros a(n) (ordinary) share,” Mr. Kaiser said.

But P&G, which is offering 65 euros for preference shares, says its tender is fair and that, having already sweetened its initial bid for the none-voting stock, it has no intention of further improving the deal. An agreement struck with descendants of Wella’s founder in March means the U.S. giant has secured control of Wella, and is now seeking sufficient shareholder approval to complete a full takeover of the German hair care group. German courts have been reluctant to challenge BaFin’s authority in the past.