809 04/07/2013 Some of the Adcock products selling around South African Pharmacies. Picture: Giyani Baloi

Johannesburg - As Adcock Ingram shareholders prepare to attend their company’s annual general meeting tomorrow, there is continued uncertainty around a number of key issues relating to the controversial bid by Chile’s CFR Pharmaceuticals.

A new uncertainty has been added to the transaction following CFR’s recent statement that it “may purchase Adcock Ingram ordinary shares otherwise than under the offer, such as in the open market or privately negotiated purchases”.

Yesterday a spokesman for the Companies and Intellectual Property Commission (CIPC) told Business Report that a supplementary prospectus that had been submitted to the commission during the festive season was likely to be approved within days.

He said the transaction was a complicated one and the CIPC had undertaken a vigorous process of approval for the initial submission. It was then required to approve the supplemented submission that deals with the amended offer announced by CFR early last month.

Once this approval is received from the CIPC, the amended dates in the supplemented submission will have to be approved by a number of other regulators.

This means that Adcock shareholders will have to wait an unspecified amount of time before they receive the supplementary circular and the supplementary prospectus that have to be issued as a result of CFR’s decision to amend its offer.

In addition, it is unclear what is the status of the irrevocable undertakings that Adcock shareholders gave to the CFR offer. Because of the extension of the transaction, it is likely that these irrevocables have expired or will expire before shareholders have the opportunity to vote on the transaction.

There is also the issue of the impact of the more volatile conditions around emerging market currencies, as well as the sell-off of assets across emerging markets.

The CFR share price is currently trading at around 114 Chilean pesos (R2.30), which is at the low end of the spectrum required in terms of the deal.

For South African shareholders it is unclear to what extent the weakness in the share price may be compensated by changes in the relative strength of the rand against the Chilean peso.

An additional area of uncertainty has been introduced following the recent joint statement in the media by CFR and Adcock. The statement refers to the extension of the date for fulfilment or waiver of the preconditions to the revised scheme consideration.

It is in this statement that the merging parties point out to shareholders that they might purchase shares on the open market or in private transactions.

While such purchases, if they occurred, might appear to contravene the regulations of the Takeover Regulation Panel, which requires all shareholders to be treated equally, Lucky Phakeng, the panel’s executive director, told Business Report yesterday that the announcement by the merging parties, including the statement about purchasing shares in the open market or privately, had been approved by the panel.

The CFR offer that was formally made to Adcock shareholders in September last year includes an element of cash and CFR shares.

One corporate law expert pointed out yesterday that if any Adcock shares were bought for 100 percent cash by CFR, or a concert party, during the offer, then it would be difficult to see how the same cash offer did not have to be made to all Adcock shareholders.

CFR did not respond to request for clarification on these issues. A spokesman told Business Report: “We have an offer on the table and we continue to engage with stakeholders.”

Adcock shares eased down 15c to close at R70 in low volume trade yesterday. - Business Report