CVC's cheeky Italian drug buyout will likely work

Recordati Industria Chimica e Farmaceutica

06/10/2026 11:57

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Liam  Proud
LONDON, Oct 6 (Reuters Breakingviews) - All is fair in love and war — and dealmaking. Buyout shop CVC Capital Partners CVC.AS on Tuesday slightly raised its offer for €11 billion Italian pharmaceutical group Recordati RECI.MI. It won't be enough to please minority investors like Palliser Capital, which has rightly criticised the price and the process. The bidding group, which also includes Belgium's Groupe Bruxelles Lambert (GBL) GBLB.BR, nonetheless seems to be in the driving seat.
Recordati's drugs include Isturisa, which treats elevated levels of cortisol in patients' blood. CVC's involvement dates back to 2018, when it bought about half of the Italian company from the controlling family at a discount to the prevailing share price, without pursuing a delisting. The private-equity firm, which now owns 47% through a holding company, seems to have unsuccessfully shopped Recordati around in 2024, based on news reports at the time. Now, the plan is instead to sell CVC's stake from an old fund to a newer one, while also buying out minority investors with the help of GBL.
Even after Tuesday's bump, which raised the offer from €51.29 per share to €53, the terms look stingy. It's just 17% above the late-March undisturbed price — a slim premium by normal M&A standards, and one which looks even worse because Recordati's listed peers are up 14% since then, when valued in euros. The new offer implies a 2026 price-earnings ratio of just under 17 for the Italian company, based on Visible Alpha data. That's roughly in line with the average of the same group of rivals: Almirall, Hikma Pharmaceuticals, Ipsen, Lundbeck, Orion and Swedish Orphan Biovitrum. Many analysts, and Palliser, have argued that Recordati deserves a premium to these peers because of its fast-growing rare diseases division. The activist fund wants an offer of no less than €60 per share, which is close to the mean analyst target price of €60.10, using LSEG data.
Whether that's a valid wish or not, it's notable that Recordati's independent directors deemed the offer inadequate and not fair. They make up just 4 of 10 board members, though, so couldn't block it. Rothschild bankers performed a fair-value exercise at the behest of these independent directors, which used a range of different valuation methodologies that in almost all cases came up with a higher price than the new revised offer.
None of this may matter, however, if CVC and GBL can squeak their way to two-thirds of the shares. That's eminently possible: the buyout shop starts with 47%, and the bidders have control of about an extra 10% through various other positions, including derivatives. They can keep increasing that number by buying in the market, so long as they don't pay more than €53 for each share. After Tuesday's bump, the stock was trading at €52.95, implying scope for CVC and GBL to top up their positions.
With control of 67% of Recordati's shares, the offer would succeed and the bidders would be able to push through a merger of Recordati into a private company. That may be even less appealing for minority shareholders, who could be stuck with an illiquid security — or, more likely, have to sell their shares. It would be a backdoor delisting, without a proper premium. The mere threat of that means many shareholders will probably take up CVC's lowball offer.
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CONTEXT NEWS
CVC Capital Partners and Belgian investment firm Groupe Bruxelles Lambert on October 6 raised their takeover bid for Italian drugmaker Recordati to €53 per share and extended the offer period. The offer, launched through vehicle Respighi BidCo, was increased from an original price of €51.29 per share.
The revised bid represents a 16.6% premium to Recordati's closing price on March 25, the last trading day before the announcement of the non-binding offer.
The move comes three weeks after activist investor Palliser Capital argued that the original offer undervalued the drugmaker, adding the consortium should raise it to at least €60 per share.
Shares in Recordati were trading at €52.95 as of 0926 GMT on October 6.

(Editing by Neil Unmack; Production by Varun H K)
((For previous columns by the author, Reuters customers can click on PROUD/liam.proud@thomsonreuters.com))