CFR increased 3.4 percent to 131 pesos at 3:17 p.m. in Santiago, the highest since July 2011 on an intraday basis. Trading volume was about seven times the full-day average of the past three months. The IPSA benchmark index retreated 1.9 percent.
CFR reached an accord with Adcock’s board to pay 51 percent to 64 percent of the $1.3 billion offer in cash, with the balance in shares from a capital increase, according to a statement yesterday. Several Adcock holders had said they opposed the takeover, first announced in July, as they didn’t want to receive CFR shares. The Public Investment Corp., which oversees pensions for South African government workers and is Adcock’s largest investor, said it wanted the offer to be at least 50 percent cash.
“The deal with Adcock’s board brings CFR closer to a binding offer,” BTG Pactual analysts JC Santos and Pedro Montenegro wrote in an e-mailed note today. “Though the deal involves high execution risks, we think the potential synergies make it compelling for CFR shareholders.”
CFR said combining the companies would produce annual cost savings of at least $440 million. BTG Pactual reiterated a buy rating and set a price target for the end of 2014 of 160 pesos.
Adcock will generate as much as 40 percent of the group’s combined revenue, according to yesterday’s statement. Adcock will be delisted from the Johannesburg exchange and CFR plans a secondary listing on the bourse.
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