PIC stance on CFR likely to derail Adcock deal

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A pharmacist counts pills in a pharmacy.

Johannesburg - South Africa's state pension fund said on Friday it remained opposed to a $1.2 billion cash and stock takeover offer for local drugmaker Adcock Ingram from CFR Pharmaceuticals, saying it did not want shares in the Chilean company.

Opposition from the state-run Public Investment Corporation (PIC), the top shareholder in Adcock, is almost certain to derail the rare Chile-South Africa tie-up that requires approval from shareholders holding 75 percent of Adcock.

PIC chief executive Elias Masilela said in a statement CFR's offer reduces the potential for Adcock shareholders to benefit from a turnaround in the struggling company.

“We believe that CFR shares are fully valued whilst Adcock Ingram's share price has the potential to rise substantially in value through better management,” Masilela said.

The PIC owns around 19 percent of Adcock.

Masilela also voiced concerns about CFR as a family-controlled business, as the founding Weinstein family controls around 73 percent of CFR.

“Given our experience of corporate governance challenges with some family-controlled businesses locally, we believe this introduces risks to the investment, especially considering the short listing history of CFR,” he said.

Shares of Adcock were little changed at 70.51 rand at 11:15 SA time, compared with CFR's cash and share offer of 74.50 rand. - Reuters

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