Adcock Shareholder Opposes Takeover Bid From CFR Pharmaceuticals

Adcock Ingram Holdings Ltd. (AIP) shareholder Oasis Group Holdings said it won’t support a bid for the South African company from Chilean drugmaker CFR Pharmaceuticals, as it doesn’t want CFR stock.

Adcock, the Johannesburg-based maker of drugs including Panado painkillers, said on July 3 it received a non-binding cash and shares bid from CFR valued at a potential price of 12.9 billion rand ($1.3 billion), or 73.51 rand a share.

Shareholders would “effectively be exchanging our relatively cheap Adcock shares for a company which has lower profit margins, a much lower return on equity and higher gearing levels,” Hassan Motala, a spokesman for Cape Town-based Oasis, said in an e-mailed statement today. “CFR shares currently trade at a significant premium compared to Adcock Ingram.”

Adcock investors would also “stand to lose out if the rand was to regain some of its lost ground against the U.S. dollar and the Chilean peso, since it would impact the value of the CFR pharmaceutical shares,” Motala said. The rand has weakened 15 percent against the dollar this year, the worst performer of 16 major currencies tracked by Bloomberg.

Adcock shares gained 0.2 percent to 68.90 rand as of 11:05 a.m. in Johannesburg. The stock remains 6.3 percent below the reported value of the CFR offer, suggesting investors have yet to be convinced the bid will be successful.

The Public Investment Corp., the South African government-employee pension-fund manager that’s also Adcock’s biggest shareholder, said May 14 it would prefer a local company to buy Adcock.

Oasis holds 2.3 percent of Adcock shares, the money manager said by e-mail. PIC has a 14 percent stake, according to data compiled by Bloomberg.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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