Proof, if ever it was needed, that share options are the remuneration that keeps costing came in the form of yesterday’s news that CFR Pharmaceuticals looks set to be stuck with the bill for the accelerated exercise of Adcock Ingram share options that were awarded to Tiger Brands’ executives a long time ago.
For the many shareholders who believe that much of Adcock’s underperformance can be attributed to poor management while in the Tiger Brands’ stable, the prospect of Tiger Brands executives picking up a nice bonus for this deal may be difficult to swallow.
Senior Tiger Brands executives would have been allocated Adcock share options as part of their remuneration packages while Adcock was part of the food company. It was unbundled, somewhat unceremoniously, from Tiger Brands in 2008.
It is likely that many of the executives who are set to score from this travesty have retired from Tiger Brands.
Of course one should say “proposed” deal. Until the shareholders vote and until all of the conditions precedent are met, it cannot be said to be a done deal. It’s not that any of the conditions are particularly burdensome, it’s just that, in this case, there are a few “jilted” suitors who may be waiting in the wings ready to pounce out with objections just before the Adcock shareholders say “I do” to the Chileans.
The CFR bid has certainly highlighted the great potential offered by Adcock and the combined entity looks very appealing. It could very well be the SABMiller of the global pharmaceuticals industry.
CFR certainly makes a very compelling case for growth prospects in emerging markets, where urbanisation is expected to boost demand for over-the-counter products and for chronic care therapy. The opportunity to increase utilisation of Adcock’s current excess capacity is also an important consideration.
But there will be Adcock shareholders who might prefer to know CFR better before agreeing to the marriage.
Brian Dames, the Eskom chief executive, was asked yesterday how he saw the potential for using natural gas – through the proposed hydraulic fracturing process in the Karoo – to feed Eskom’s power stations.
“We certainly see this having great potential in changing the energy picture in the country… if this resource is there [underground in the Karoo].”
He indicated that Eskom would think of powering new power stations with gas if there was sufficient supply once the process was kick-started. This would feed new power stations rather than existing coal-fired stations, such as Medupi, Kusile and the proposed Coal 3 station.
“We have been debating this [for] too long [in South Africa],” Dames told a news briefing in Cape Town yesterday.
Fracking, as it is dubbed, had “fundamentally changed” the whole economy of the US. Pretty soon that country would be exporting gas and was on the march to become fully self reliant. The process had “massive potential” for South Africa, he believed, if it could be done in an environmentally sustainable way.
Turning to the possibility of gas-fired power stations, he said that Eskom could build new stations in the Northern Cape if the Karoo resources were significant enough, pointing out that there was no existing generation capacity in that province, which was in the middle of the country.
The two major urban areas in that province are Kimberley, the provincial capital, and Upington, but Dames did not give an indication where in that province new power stations could be sited.
Dames also indicated that although the cabinet had given the nod to a third new coal-fired power station, this had not been costed yet. It would also have to be determined what support would be elicited for the project from the government.
Small businesses are being given a leg up by banks and other small start-ups, but the ultimate push is required from the government, which has the opportunity to reduce the scourge of unemployment by supporting small enterprises.
Small businesses boost not only neighbourhood and community economies, but also the national economy, according to the National Planning Commission’s Vision 2030 document. This blueprint puts the spotlight on developing more innovative small businesses, which it says will benefit the country.
The red tape and high casualties associated with starting a business weigh down the system, inhibiting aspirant entrepreneurs from taking the big leap.
Local banks and start-ups recognised the need to nurture an environment where businesses can thrive. The Hook Up Dinner, for instance, began in a small café in Braamfontein in Johannesburg, and has now launched in Durban and Cape Town.
The platform allows entrepreneurs to be connected with each other and give each other constructive criticism of their businesses. But as founder Lebo Molefe says, the main aim is connecting entrepreneurs with like-minded people and creating a communal space.
Nedbank has continued its campaign to tap into the small business market with initiatives such as Small Business Friday, and next year the bank will launch a small business index, to provide insight and analysis of the sector. Research for the index found that businesses were finding it difficult to access funds.
The platforms and mediums may vary but the message is the same: South Africa needs more entrepreneurs and entrepreneurs need an environment that allows them to succeed.
Entrepreneurs look to the Department of Trade and Industry to reduce the amount of red tape in starting a business. Initiatives by banks and other organisations can only succeed if the government creates an environment that encourages entrepreneurship.
Edited by Peter DeIonno. With contributions from Ann Crotty, Donwald Pressly and Zandi Shabalala.