CVC Capital Partners is encountering significant opposition from shareholders over its effort to take the Milan-listed pharmaceutical company Recordati private, with investors contending that the proposed offer undervalues the firm. The private equity group’s bid, which values Recordati’s shares at €51.29 each, has prompted accusations that the offer is designed to pressure minority shareholders into selling at an unfair price.

Several minority investors, including London-based activist Palliser Capital, have formally expressed their dissent to Recordati’s board. Palliser Capital described CVC’s approach as an attempt to “railroad” minority shareholders into accepting a “lowball price.” According to six shareholders interviewed, concerns extend beyond valuation to the governance and structure of the proposed deal.

The Recordati board is divided on the bid’s merits. While non-independent board members appear more receptive, all four independent directors have opposed the transaction. The independent directors characterize the offer price as “inadequate from a financial standpoint” and suggest that the proposal exerts a “relevant degree of pressure” on shareholders to tender their shares. They ultimately deem the entire offer “not fair.”

CVC acquired a controlling stake in Recordati in 2018 by leading a consortium that purchased the Recordati family’s 51.8 percent holding company for €3.03 billion. This earlier deal implied a total equity valuation of approximately €5.86 billion for the company. In contrast, the current tender offer—launched in May alongside Belgium’s Groupe Bruxelles Lambert and other investors—values Recordati’s shares at about €10.7 billion in total, including a 13 percent premium over the share price before takeover rumors surfaced in March.

Representatives familiar with CVC’s position have attributed the relatively modest premium to the complexities of Recordati’s ownership structure and uncertainties surrounding its principal blockbuster drug. Despite shareholder resistance and the potential failure to secure the 90 percent acceptance threshold needed to force minority shareholders into a squeeze-out, CVC intends to proceed with the take-private bid.

Should the offer not achieve the required level of acceptance to delist the company, sources indicate that CVC is prepared to explore alternative avenues for divesting its controlling interest in Recordati. The private equity group’s motivation for this exit strategy appears to be driven by a longstanding desire to realize returns from its investment since the initial 2018 acquisition.