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(Bloomberg) -- A consortium consisting of Warburg Pincus and KKR & Co. are in talks to acquire Gerresheimer AG, the German maker of packaging for drugs and cosmetics, according to people familiar with the matter.
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The private equity firms emerged as the frontrunner after they teamed up and other potential bidders including Bain Capital dropped, the people said, asking not to be identified discussing confidential information. Shares of Gerresheimer have risen about 12% this year, giving the company a market value of about €2.74 billion ($3 billion).
The Warburg Pincus-KKR consortium is unlikely to offer a significant premium to Gerresheimer’s current price and there are still major hurdles to a deal, some of the people said. While the talks are advanced, any final agreement could take weeks and a deal could still fall apart, they added. Representatives for Gerresheimer, Warburg Pincus, KKR and Bain declined to comment.
Dusseldorf-based Gerresheimer has already attracted interest from a number of private equity firms, Bloomberg News has reported. In February, Gerresheimer confirmed early-stage discussions with private equity investors that have made informal, non-binding expressions of interest about a potential takeover.
The company has been in the crosshairs for a takeover by buyout firms for years. It’s been seen as a prime breakup candidate due to the different nature of its two businesses. Its cosmetics arm makes plastic bottles and glass jars for perfume and skincare products, while its drug unit manufactures more complex packaging from syringes and glass vials to advanced products like injectors, inhalers and wearable infusors.
Gerresheimer has separately been exploring strategic options for its molded glass business since last year.
Interest from some suitors for Gerresheimer declined after Novo Nordisk A/S earlier this week reported another disappointment for the drugmaker’s next-generation shot CagriSema, according to the people.
Activist investor Ricky Sandler, the founder of Eminence Capital, built a stake of 5.4% in Gerresheimer as of late last year. New York-based activist shareholder Sachem Head Capital Management disclosed a position of over 5% last month.
--With assistance from Swetha Gopinath.