Activist fund Elliott picks up stake in takeover target UDG Healthcare

(Reuters) – Activist investor Elliott Investment Management disclosed a stake of about 3.1% in UDG Healthcare, weeks after the pharmaceutical services company agreed to be taken over for 2.6 billion pounds ($3.69 billion).

Private equity firm Clayton, Dubilier & Rice (CD&R) earlier this month offered to buy UDG for 1,023 pence in cash per share, in a deal that is still pending regulatory and shareholder approval. A date for the shareholder meeting to vote on the offer will be announced later.

UDG’s largest shareholder, Allianz Global Investors, which has an 8.6% stake, said last week it opposes the proposed deal as it is “opportunistic and significantly undervalues UDG and its prospects”.

Shares in Dublin-based UDG have gained more than a fourth in value since the deal was announced, overtaking the offer price. They were trading marginally higher at 1,070 pence by 0756 GMT.

“The consensus is that the current offer is underwhelming, but it has been unclear if anyone would make a public stand,” according to analysts at RBC Capital Markets, who said they have spoken to several UDG shareholders.

Elliott’s stake in UDG, as disclosed in a filing on Monday, makes the New York-based hedge fund among the top five shareholders in the healthcare company, Refinitiv Eikon data showed.

A UDG spokesperson declined to comment on whether Elliott has contacted the London-listed company or if the hedge fund has disclosed its reason for taking the stake.

Elliott did not immediately respond to a request for comment.

UDG’s third-largest investor, Kabouter Management, had given a letter of intent to vote in favour of the proposed deal, UDG had said when the deal was announced.

($1 = 0.7049 pounds)

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