Johannesburg - The Public Investment Corporation said its opposition to Chile’s CFR Pharmaceuticals SA’s takeover bid for Adcock Ingram will pay off even though the South African drugmaker is currently unprofitable.
CFR, Chile’s biggest drugmaker, dropped a 12.8 billion rand offer to buy South Africa’s biggest maker of hospital products on February 7, ending a 10-month fight for control of the company.
It was thwarted after Bidvest built up a 34.5 percent stake, enabling it to block CFR’s bid.
The offer was also opposed by the PIC, Adcock’s second-biggest shareholder with a 25.5 percent stake.
“We had been told, give us your assets and in exchange we will give you paper in CFR listed on the Chile stock exchange,” PIC chief investment officer Dan Matjila, 52, said in an August 27 interview at Bloomberg’s offices in Johannesburg.
“We’d like to use it, create wealth for ourselves, send it to Chile and then we will probably make you participate when we declare a dividend. We were unhappy with that.”
CFR has since become an acquisition target.
In May, Abbott Laboratories, the maker of heart stents and adult nutritional beverages, said it will buy the holding company that indirectly owns 73 percent of CFR.
Matjila also believes there was “a bit of misrepresentation from management in Adcock,” at the “height of the deal” of what the company’s earnings outlook was.
Bidvest chief executive Brian Joffe became Adcock’s chairman in February and Kevin Wakeford, also from Bidvest, took over from Jonathan Louw as chief executive officer in April.
Time Needed
Johannesburg-based Adcock said last week its loss per share, excluding one-time items, was 1.80 rand in the nine months through June, compared with a profit of 2.72 rand a year earlier.
Wakeford said he’s “not expecting any quick fixes” and that changes the new management are making need a “bit of time to gain traction in the market.”
Not long before the talks with CFR were announced, Adcock completed revamping its plants, prompting Louw to say that the “bride is now dressed and ready for the wedding,” according to Matjila.
“That’s an expensive wedding dress,” Matjila said of the upgrades. Louw declined to comment when contacted on his mobile phone.
CFR’s bid valued Adcock at 74.50 rand a share to 75.78 rand a share.
The PIC had calculated the value at about 82 rand and had also wanted to be a partner with CFR, Matjila said.
Adcock, which has dropped 26 percent since Bidvest built it’s blocking stake, was unchanged at 51.60 rand in Johannesburg on August 29. - Bloomberg News