IRVINGTON, N.Y. — Prestige Brands has rejected an unsolicited proposal from Genomma Lab, which seeks to acquire the over-the-counter and household cleaning products maker for $16.60 per share in cash, calling the deal inadequate, opportunistic and highly conditional.
As previously reported, Prestige Brands confirmed the company's receipt of a nonbinding letter from Genomma Lab in late February and said it would take the offer under advisement. This week, however, Prestige Brands said its board of directors — after carefully reviewing the proposal with its independent financial and legal advisers — found several reasons not to move forward with the transaction, including:
"The proposal reflects only a 23% premium to Prestige Brands' closing price of $13.50 per share on the last trading day prior to the public announcement ... the implied EBITDA multiple is meaningfully lower than comparable transactions and well below the intrinsic value of the company";
"Prestige Brands recently completed its third and largest acquisition of OTC brands in the last 15 months, barely three weeks before Genomma Lab went public with its proposal";
"[A] a credible acquisition proposal must deliver both compelling value and certainty by including, among other things, evidence of financial resources sufficient to complete a transaction in a timely fashion. In addition, any proposal must contain sufficient detail to demonstrate that it provides market-standard provisions that assure certainty of completion. The Genomma Lab proposal does not include debt commitments and is also conditioned on the approval of its shareholders, due diligence and other unspecified matters."
"Genomma Lab did not negotiate with us before making its highly conditional proposal, which was opportunistically timed before our stock price fully reflected the recent completion of the purchase of brands from GlaxoSmithKline and other initiatives," Prestige Brands president and CEO Matthew Mannelly said. "We are committed to maximizing stockholder value, and would be open to compelling, fully financed offers that provide certainty of closing. Should Genomma Lab make such an offer, there would be a basis to engage with them."