Procter & Gamble’s attempts to take full control of German cosmetics giant Wella are foundering as minority shareholders refuse to sell.

Earlier this year [WAMN: 18-Mar-03], the US titan forged a deal with the Ströher family (Wella’s controlling clan) to buy its 50.7% stake.

As this holding carries 77.6% voting rights, the deal guarantees control of the German group – but P&G requires a 95% equity stake to delist Wella and 80% to qualify for US tax benefits. However, attempts to buy out minority investors have proved futile: P&G has so far gained a mere 2.26% from the outstanding 49.3%.

The problem is P&G’s price. Although the US group recently raised its offer for preference shares to €65 ($77; £47), holders of this type of stock are still upset that voting shares (mostly held by the Ströhers) are priced much higher at €92.25.

Indeed, New York hedge fund Mellon HVB – one of the minority shareholders in question – has launched a lawsuit against P&G claiming the consumer goods colossus is discriminating against owners of preference stock.

P&G’s offer closes today (Wednesday), but will be available again for two weeks beginning June 6. The US group insists its offer is legal and is refusing to raise the price any further to gain full control.

“We would prefer to have 100% of the Wella (shareholders) but it is not essential,” it declared. “We are prepared to operate with minority shareholders if existing shareholders don’t tender at the tender offer price.”

Data sourced from: Times Online (UK); additional content by WARC staff