A privately-owned West Midland pharmacy group could find itself at the centre of a bidding war after directors accepted a cash offer that valued the business at more than £30 million.
Numark, based at Tamworth in Staffordshire, said its executive and independent directors had accepted a "competitive" offer of 410p per share from Phoenix Medical Supplies. Shareholders can elect to receive loan notes instead of cash.
It is understood that a higher offer from a second unnamed bidder failed to materialise because of an issue concerning commercial confidentiality.
A source familiar with the deal said other firms, including, possibly AAH of Coventry and Alliance Unichem, have been running the rule over Numark and could weigh in with a counter bid.
"Reading between the lines, it is obvious there is a healthy interest in Numark," he said.
But the existing close links between Numark and Phoenix, which is part of the listed German group Phoenix Pharmahandel based at Mannheim, could see off any rivals.
Through its UK subsidiary, Phoenix is the biggest shareholder in Numark with about
14.7 per cent of the stock and the two companies operate a 50:50 joint venture, NTL, which supplies medicinal and over the counter products to hundreds of pharmacies throughout Britain.
Numark, which will retain its identity, provides buying and marketing support services to more than 1,700 community pharmacies throughout the country.
Directors have considered a range of options to take the business forward, including a merger and a stock market listing.
Phoenix, whose British arm is based at Runcorn, is one of Europe's biggest pharmaceutical distribution businesses with more than 17,000 employees in 19 countries.
The 410p per share offer values Numark at about £30.3 million and represents a premium of about 82.2 per cent over the internal price of 225p a share set in July 2004.
The Numark board, led by chairman Lord (Norman) Fowler, stand to pocket a total of about £489,000, excluding an unspecified number of share options held by the executive directors which may become exercisable if the deal goes unconditional.
The directors have given irrevocable undertakings to sell the 1.6 per cent of the stock they speak for. Despite the high premium, Phoenix regards the 410p offer as fair.
"Phoenix has always been the most enthusiastic partner with Numark and it is directly from these actions that both businesses have flourished," said David Cole, chief executive of Phoenix Medical Supplies. Numark chief executive David Wood said the company had seen year on year revenue growth since 1995 and was committed to serving the needs of independent pharmacists.
"We are pleased to recommend the offer, which brings real value to shareholders and benefits members by giving them access to the further knowledge and resources of the Phoenix Pharmahandel group."
Charles Cattaneo of KPMG Corporate Finance was financial adviser to Numark and Roger Esler of Deloitte Corporate Finance advised Phoenix.