Adcock proxy vote cutoff nears but no clear victor

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Johannesburg - With four days to go before this Friday’s deadline for proxy voters to lodge their forms with Adcock Ingram, it is still impossible to determine who will emerge the victor in the hotly contested battle for the pharmaceutical company.

By the close of business on Friday, Bidvest had built up its stake in Adcock to 6.8 percent from the 4 percent it had at the beginning of the week when it launched its R70 a share offer.

Adcock issued a Stock Exchange News Service statement to notify shareholders that a wholly owned subsidiary of Bidvest had a 6.8 percent shareholding in Adcock; a 2.2 percent stake, or about 3.8 million shares, was bought from asset manager Oasis.

Meanwhile, two leading international proxy advisory firms have recommended the offer from CFR Pharmaceuticals to their clients who hold Adcock shares. On Friday, both boards said they welcomed the support from the Institutional Shareholder Services (ISS) and Glass Lewis. Khotso Mokhele, Adcock’s chairman, said: “The independent recommendations from Glass Lewis and ISS are very positive and re-affirm the Adcock Ingram independent board’s view that CFR remains the most attractive option for Adcock Ingram.”

Business Report was unable to get a copy of either report.

Adcock shareholders who intend to vote by proxy rather than vote in person at the shareholder meeting on December 18 have to lodge their proxy forms with Computershare by 10am on Friday. Generally, the deadline for proxy voting is 48 hours before the shareholder meeting but as December 16 is a holiday, the deadline moved to December 13.

In many instances the proxy votes provide a reasonably clear indication of the outcome of the issue that has been put before the shareholders. However, traders believe that because of the highly contested nature of this transaction, shareholders may want to delay the final decision making until the meeting on December 18. In addition, some shareholders will hold out until the last minute in the hope that Bidvest will increase its offer.

While it is not impossible, it is unlikely that the Public Investment Corporation (PIC), which holds 19 percent of the potential votes at the meeting, will vote by proxy. And if it does, it is unlikely that it will reveal how it has voted until the actual meeting.

If the PIC does not support CFR’s offer then, combined with Bidvest’s 6.8 percent stake, it will be impossible for CFR to secure the 75 percent support necessary to implement the deal. Traders say that if the CFR deal does not go through there will be immediate downward pressure on the Adcock share price and a rush to sell shares into the Bidvest offer.

However, if the CFR offer fails, Bidvest will have little incentive to continue buying Adcock shares. “Some Adcock shareholders are holding out in the hope of getting a higher cash offer but run the risk of losing the immediate R70 cash from Bidvest,” one institutional trader told Business Report.

A number of analysts say they have detected resentment among Adcock shareholders, who believe that Bidvest merely wants to scupper the CFR deal and has no serious intention in doing an Adcock transaction on the sort of terms being offered by CFR.

A spokesman for Bidvest dismisses this charge, pointing out that it was only after Bidvest made a move on Adcock that CFR arrived with a counter-offer. He also noted that CFR was only offering a maximum of R47 cash per Adcock share and a minority stake in a company with an uncertain future.

Adcock shares rose 1.77 percent to close at R72 on Friday. - Business Report


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