Jonathan Louw has resigned as the chief executive of Adcock Ingram after CFR Pharmaceuticals' bid failed. File photo: Leon Nicholas

Johannesburg - Adcock Ingram’s underperfomance since its listing in 2008 was the final nail in the coffin for outgoing chief executive Jonathan Louw, shareholder activist Theo Botha said yesterday.

Although Louw’s future became bleak the moment Bidvest chief executive Brian Joffe occupied the chairman’s seat at Adcock, because his management team had backed the CFR Pharmaceuticals takeover bid, Botha said Louw’s failure to transform the company’s fortunes had caused his ousting.

“As a chief executive, he had ample opportunity to turn the company around. Last year he lost focus because of the South Americans’ deal. He hasn’t performed well since the listing,” Botha said.

Louw had been Adcock’s chief executive since its unbundling from Tiger Brands before its JSE listing in 2008.

Last month Adcock issued a trading statement saying sales at its southern African business so far in the second quarter were 6 percent behind the corresponding period last year at the end of February and its consolidated revenue was effectively flat on annual comparison. In January, it said its profit for the interim period to March was expected to decrease by 20 percent.

Joffe made no secret of the fact that he wanted a leadership change at Adcock, saying management had failed to unlock shareholder value. The Public Investment Corporation (PIC) backed the industrial firm on this in January. The PIC and Bidvest together hold more than 56.8 percent of Adcock.

Louw’s resignation follows that of Adcock board chairman Khotso Mokhele in February.

But Jean Pierre Verster, an analyst at 36One Asset Management, said while Adcock had been underperforming relative to its competitors, a lot of the criticism levelled at Louw was unfair.

“He took over after the unbundling of the company from Tiger Brands and years of underinvestment in Adcock, which the management and the board first needed to rectify,” he said.

Verster said while Adcock’s management did make its own strategic mistakes, such as the Indian expansion and the lack of international joint ventures that the likes of Aspen had utilised for growth, the firm’s underperfomance could not all be laid at Louw’s door.

He said the board had set a conservative strategy for Adcock, and added that Louw had done the admirable thing by resigning and was leaving with his dignity intact.

“He remains a competent executive who would unlock value for the company he will head next when given the right tools,” Verster said.

But Botha said that, as the chief executive, Louw drew up the strategies that the board approved. Even though it was up to the board to take another look at these when they did not work, the buck stopped with him.

Both Botha and Verster expect Bidvest to pick a chief executive who will implement a strategy to unlock more value for shareholders. And it appears that even the shareholders that publicly supported CFR’s bid are taking comfort in this.

Botha said Joffe had an eye for good managers. Bidvest’s managers had made successful investments across the spectrum, he added.

Adcock shares rose 0.31 percent to close at R58.50 yesterday, while Bidvest shares lost 1.01 percent to close at R279.53. - Business Report