Adcock Continues Exclusive Talks With CFR as Other Offers Made

Adcock Ingram Holdings Ltd. (AIP), South Africa’s largest supplier of hospital goods, remains in exclusive talks with Chilean suitor CFR (CFR) Pharmaceuticals SA even after receiving takeover proposals from other bidders.

The board “received further unsolicited proposals from potential offerors,” after it entered exclusive talks with drugmaker CFR, Johannesburg-based Adcock said in a statement today. These proposals aren’t regarded “as being more favourable,” than the CFR offer, it said.

Actis LLP, a London-based private-equity firm, proposed an offer for Adcock to counter the bid from CFR, two people familiar with the matter said on Aug. 13. Actis made a 70 rand per share offer to Adcock’s board in late July on condition it gets the same information as given to CFR, one of the people said. More than 80 percent of the offer would be in cash, the person said.

Adcock shares, which rallied 2.7 percent to 67.75 rand on Aug. 13, fell as much as 2.8 percent after the company’s statement today. The stock traded 0.8 percent lower at 67.60 rand as of 1:03 p.m. in Johannesburg, valuing the company at 11.8 billion rand ($1.2 billion). The maker of drugs including Panado painkillers said on July 3 it had entered exclusive talks with CFR after receiving a non-binding cash and shares bid valued at a potential 73.51 rand a share.

New Shares

CFR, Chile’s biggest drugmaker, said Aug. 13 profit increased 89 percent in the second quarter from a year earlier. The offer for Adcock will be partly funded by $750 million of new shares.

CFR didn’t disclose the component of shares in its offer, causing concern among investors including The Public Investment Corp., Adcock’s biggest shareholder, and Oasis Group Holdings.

The PIC, which oversees the pension funds of South African government workers, would be willing to consider a strategic partner or investor if a cash offer is for a 50 percent plus one share control of Adcock, Chief Investment Officer Dan Matjila said on July 17. Oasis Group Holdings, which holds 2.3 percent of Adcock shares, said on July 16 it won’t support the CFR bid as it doesn’t want the Chilean company’s stock.

Adcock rejected a 6.2 billion-rand cash and shares offer from Johannesburg-based Bidvest Group Ltd. (BVT) for a 60 percent stake in the company in March.

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

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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