Zeneca's pounds 46m bid for Netherlands biotech faces revolt

Zeneca, the UK drug giant, has locked horns with a small band of Dutch shareholders who are threatening to scupper its pounds 46m agreed bid for Mogen, the Leiden-based plant biotechnology company.

The shareholders, who attended an emergency general meeting held by Mogen yesterday, have opposed the bid, accusing management of selling out to Zeneca at too low a price. Zeneca is offering 13.75 Dutch guilders (433p) a share which compares with Mogen's price of more than 30 guilders before the bid was announced in early April.

Eelkman Rooda, who runs the Rotterdam-based corporate finance company, Eelkman Rooda, Van Lawick & co which is representing the shareholders said: "They are very angry and disappointed at Mogen's management. They gave us the impression that they did not discuss price with any of the other bidders in the pre-qualifying round."

Mr Rooda estimated that small shareholders representing more than one- third of Mogen would reject Zeneca's offer. Although Zeneca has secured commitments from six institutions representing 51 per cent of Mogen, the group has said the offer, which closes on 16 June, is conditional on it getting at least two-thirds of the shares tendered.

Under Dutch takeover law, achieving over two-thirds acceptances would mean Zeneca was obliged to buy Mogen. Stuart Shields, a manager for Zeneca Agrochemicals said: "If we don't get two-thirds we could continue, but there's not much point. Having a substantial minority shareholding would limit our freedom to act and change things."

Arie Breure, managing director at Mogen, denied that he had not discussed Mogen's price with other bidders, but indicated that in the initial round, which involved 19 companies, strategic fit was a more important consideration.

"Mogen has not got a major track record in profits and turnover. For technology companies it is essential that there is a strategic fit with the company that is bidding," Mr Breure said.

He added that five of the 19 companies expressed serious interest in Mogen and that three, including Zeneca went into a second round of due diligence. Though he would not say if price was discussed throughout the bidding process, Mr Breure said that Zeneca's was the highest offer. "I had hoped to get a higher bid out of this process, but Zeneca's was the best." Zeneca had originally bid 12.50 guilders before raising its offer.

Mogen shareholders are believed to have become disgruntled after the German group Aggrevo bought the agricultural biotech PDS for around 110 times revenues. Mr Eelkman said that Zeneca's offer valued Mogen at around 10 times revenues. "This price does not reflect the real value of the company", he said.