Two founders of the pharmaceutical firm Goldshield who were the subject of a failed NHS price-fixing fraud prosecution brought by the Serious Fraud Office (SFO) have emerged on opposing sides in rival bids to take the company private.
Ajit and Kirti Patel were among nine executives targeted in a £20m SFO investigation into claims that an industry cartel had been conspiring to limit the supply of the commonly prescribed blood-thinning drug warfarin. The case collapsed last year when a judge threw the charges out.
Since then the co-founders, who had previously stepped back from the company to focus on legal defences, have been circling Goldshield, which makes generic drugs, looking to buy some or all of it back.
A management buyout team including Kirti Patel, one of two pharmacists who founded the business in 1989, now appears to have the upper hand after announcing an offer at 460p a share, valuing the business at £169m, after the market closed on Friday night. Kirti and his fellow executive directors, backed by private equity house Hg Capital, also acquired a stake of 17% on Friday afternoon in a hastily organised auction to add to the 11% they already hold.
Goldshield's three independent directors, led by former government anti-narcotics tsar Keith Hellawell, are still bound by a commitment they gave at the start of last week to recommend that shareholders accept a 450p-a-share rival offer. The lower bid comes from Goldshield's co-founder and former executive chairman Ajit Patel, who is backed by the Israel's Fuhrer family, who already control drug maker NeoPharm. Hellawell is expected to switch his backing to the Kirti bid later this week. Ajit Patel's side said it was continuing to "consider its position".
Ajit and Kirti Patel, who are unrelated, share a common Gujarati surname. Goldshield chief executive Rakesh Patel is also unrelated; he had become friends with Kirti while they were studying together.
Two years ago Ajit and Kirti Patel quit Goldshield as the company agreed to settle a lawsuit brought by the Department of Health claiming the company had been involved in a cartel to fix the price and supply of warfarin. Like several other firms accused of conspiring over warfarin prices, Goldshield paid £4m to end the claim without admitting liability. Both received contractually entitled payoffs from the company on departure.
Sources close to Goldshield said the decision to settle the Department of Health claim had been a purely pragmatic one, designed to restore relations with the NHS, a major customer.
The departing founders and Goldshield were among several executives and leading generic drug-makers facing criminal charges brought by the SFO in relation to the same claims. However, the criminal case was thrown out before it reached trial after the judge ruled the offence of conspiracy to defraud could not be used in cases of alleged price-fixing.