Adcock Ingram is expected to announce the details of CFR Pharmaceuticals’ offer within a matter of days. Last week marked the deadline for the renewal of the Stock Exchange News Service announcement issued last month.
That statement outlined in detail the circumstances surrounding the offer and also the potential terms of the offer. However, it was merely an indicative offer and, to date, Adcock shareholders have not received a firm offer from CFR.
The only firm offer they have received has come from Bidvest. In March, Bidvest launched an unexpected, and what was to become a hostile, bid to acquire 60 percent of Adcock at a price of R62.81 a share. It was rejected by the Adcock board, which then invited other interested parties to bid for the company. In July, the Chile-based CFR made a “potential” offer valued at R73.51 an Adcock share. On Friday, the Adcock share closed 35c weaker on the day at R69.45.
In last month’s statement, CFR said the indicative offer would be between R73.51 and R75.92. This offer range, supported by the Adcock board, reflects assumptions about the rand value of the CFR share price and the mix of cash and CFR shares selected by Adcock shareholders.
In terms of this offer, Adcock shareholders can elect to receive between 51 percent and 64.3 percent in cash and the rest in CFR shares. As part of the transaction, CFR plans to seek a secondary listing on the JSE.
At the time of the September announcement, CFR was trading on the Chilean Stock Exchange at the equivalent of R2.49 a share. In recent weeks the share has traded at slightly lower levels. On Friday, CFR closed at R2.47.
Analysts said last week that a critical issue for shareholders contemplating the deal would be the maximum amount of cash that Adcock shareholders would be able to choose.
Although there had not yet been a firm offer, last week Reuters reported that four Adcock shareholders, “including two top-10 shareholders”, said they would back the $1.3 billion (R12.7bn) offer from CFR.
Prudential Portfolio Managers, Adcock’s third-largest shareholder, told Reuters it was in favour of the indicative pricing and the merits of the deal.
“We think the synergies and cost savings of putting these two businesses together would be significant so, in all likelihood, we would choose to remain in the combined entity.”
The key decision-makers in the transaction are likely to be Foord and the Public Investment Corporation (PIC), which together hold about 25 percent of Adcock. Foord will not comment on the transaction.
The PIC has not indicated whether it was still opposed to the transaction, which would result in a foreign entity controlling a major South African pharmaceutical company.