Johannesburg - South Africa's Bidvest Group is in talks with a fellow top investor in Adcock Ingram to jointly control nearly half of Adcock Ingram, in a deal that would allow the conglomerate to revamp the struggling drugmaker.
Bidvest has been trying since 2013 to take majority stake in South Africa's No.2 drugmaker, seeing a chance to add painkillers and cough syrups to its range of products.
Last month, it offered 52 rand per share for the stock it does not already own in the firm but Bidvest's founder and Chief Executive Brian Joffe said some shareholders, including the PIC, were unlikely to accept the mandatory offer.
Under the latest deal announced on Wednesday, the Public Investment Corporation (PIC) and Bidvest would each contribute 41 million shares, or 24 percent stakes, into the proposed pool agreement to control about 48 percent of Adcock.
Bidvest owns just over a third of Adcock and the PIC holds about 26 percent, according Thomson Reuters data.
Shares in Adcock were little changed at 51.99 rand while Bidvest was up 0.1 percent at 326.74 sand.
“Given the stake that Brian Joffe holds and provided he can work together with the PIC, he can reshape the business without actually paying some kind of a control premium,” said Nic Norman Smith, chief investment officer at Lentus Asset Management.
Bidvest, a group spanning car showrooms, shipping and catering, would be responsible for the management of Adcock in the proposed pool agreement.
For the PIC, which manages more than $220 billion in government employees pensions, the deal puts its $225 million investment under the custody of one of South Africa's most respected stewards of shareholder capital.
Since 1990 Bidvest's share price has increased more than 140-fold - and Joffe has said it “outscores Jack Welch's GE and Warren Buffet's Berkshire Hathaway as a wealth creator”.
Adcock is trailing rivals as it struggles with slowing sales, over-reliance on a heavily regulated home market and factories that are running below capacity.
After Joffe first tried, and failed, to buy control of Adcock in March 2013, Santiago-based CFR Pharmaceuticals stepped in with its own offer.
But CFR's higher cash-and-shares bid was effectively blocked when Bidvest raised its stake to the current holding and after the PIC said it was not willing exchange its shares in Adcock for those in CFR.
Reuters