AB-Biotics: Kaneka's €5 Takeover Bid Rejected by Minority Shareholders

AB-Biotics: Kaneka offers €5 per share, but minority shareholders resist

AB-Biotics spent over a decade without making a profit, and just as it started to earn, someone with a checkbook appeared. The Catalan biotech company, listed on the MAB under the ticker ABBO, has received a takeover bid from Japan's Kaneka for €5 per share, and 25% of its capital is organized to reject it. In between, there have been four years of international agreements, a textbook stock market rally, and an ongoing debate: fair price or minority shareholder squeeze-out?

An MAB biotech that sold worldwide

The company's trajectory reads like a catalog of alliances. In 2015, it signed with Derbycare, part of the Asian group Hutchinson Whampoa, to market a pediatric probiotic in China; it acquired the license for the first probiotic toothpaste for Europe, the US, Russia, and Turkey from Japan's Wakamoto; and it entered the US market with Dupont with AB-Life, a supplement to reduce cholesterol.

The trickle continued: Pakistan with Matrix Health foods, Australia and New Zealand with Mylan under the brand Enliva, Israel for its genetic test Neurofarmagen, a study of the latter with 18 Spanish hospitals, a fertility test with Fertypharm, and in 2017, the sale of an iron microencapsulation patent to Frutarom. Many headlines, and for years, no positive accounts. That was the underlying problem.

Kaneka enters the capital: 34% at market prices

The turning point came in early 2018 when Japan's Kaneka acquired more than 30% of the company, becoming its largest shareholder. What stood out were the prices: purchases at €3.25, €2.27, €2.30, and €2.40, averaging around €2.90 per share when the stock was trading near €2.38. No entry discount. A premium, rather.

In parallel, the accounts turned around. The company, previously burdened by chronic losses, saw its sales double and triple, with the founders—holding around 20% of the capital—not selling any shares. Little free float, an industrial partner with muscle, and finally positive numbers. The perfect cocktail for what came next.

The rally to all-time highs

The stock had broken €2.20 in 2015 with 10% gains in a single session. In 2018, the movement was different: it closed at €3.50, surpassed €4, and reached all-time highs at €4.70, heading towards €5. Four years earlier, some were already talking about seeing it between €4 and €5 'by the end of the year'.

With negligible volumes, though. In one session, 459 shares could change hands, moving the price by 10%. Those who trade packages of €15,000 or €20,000 know what that means: entering and exiting without crashing the price is mission impossible. Some argue that the stock was being hyped in forums and moved by half a dozen hands; against this weighs the fact that the accounts were genuinely improving and the Japanese partner was paying above market price.

The €5 takeover bid and the 25% rebellion

The outcome arrived with Kaneka announcing a takeover bid to acquire 100% at €5 per share. And that's where opinions diverged. Some saw it as the logical end: the Japanese giant reaps the rewards, and small shareholders collect a decent revaluation. Others read it directly as plunder, pointing to an understanding between the buyer and the founders for the latter to remain in charge of the business and collect what the offer doesn't pay through other means.

Minority shareholders, grouped in an association—claiming to represent 25% of the capital—rejected the operation and launched a campaign to force a price increase. Their argument: a second exclusion bid from the MAB could not pay less than €5. The company has also commissioned a new valuation analysis. And they recall the obvious: no one is forced to sell.

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It remains to be seen if that 25% will hold. Kaneka needs a high percentage to delist AB-Biotics from the MAB, and with that bloc against it, it will have to decide whether to raise the price or coexist with uncomfortable partners. No one has closed the matter yet, and the valuations held by each side do not match. Nor do they seem likely to match anytime soon.