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Adcock Largest Shareholder Undecided On $1.3 Billion Deal

Adcock Ingram Holdings Ltd. (AIP)’s largest shareholder said it won’t decide whether to support a $1.3 billion takeover proposal from Chilean drugmaker CFR Pharmaceuticals SA (CFR) until Nov. 4 at the earliest.

“The Public Investment Corp. has not made a decision yet, the transaction is still under consideration,” PIC’s Chief Investment Officer Daniel Matjila said by text message today. “We’re doing our utmost best to have a position on Monday.”

Adcock, South Africa’s largest supplier of hospital products, said yesterday shareholders representing about 45 percent of its shares had backed the cash and shares deal. As many as 75 percent of investors will have to vote in favor for the takeover to succeed, Khotso Mokhele, chairman of Adcock’s independent board, said Sept. 11. The PIC, which oversees the pension funds of South African government workers, has a 14 percent stake in Adcock.

“The PIC vote will be crucial,” Wayne McCurrie, a portfolio manager at Momentum Asset Management in Johannesburg, said by phone today. “I don’t see why the deal won’t go through at this stage, I just think some shareholders will wait until the last minute to commit.”

CFR, Chile’s largest drugmaker, said in July it would pay 12.6 billion rand ($1.3 billion) in cash and shares for Adcock as it seeks to expand in other emerging markets. The company said last month it will settle as much as 51 percent to 64.3 percent of the purchase through cash and the balance with new CFR shares. The transaction works out at 73.51 rand per Adcock share, according to both companies.

Agreements Struck

Adcock shares gained 0.2 percent to 71.35 rand as of 10:52 a.m. in Johannesburg, giving the company a market value of 12.5 billion rand. CFR rose 0.1 percent to 130 pesos at the close of trading in Santiago yesterday.

The PIC would be willing to consider a strategic partner or investor if a cash offer is for 50 percent plus one share control of Adcock, Matjila said on July 17. He said in May the PIC would prefer a South African company to buy the maker of Panado painkillers and Corenza cold medicine.

CFR struck agreements with Adcock’s Swiss partner Baxter Healthcare SA regarding the licensing, distribution and supply of Adcock’s hospital products and with Adcock’s black empowerment partners in South Africa, according to yesterday’s statement.

Actis Competition

“This is a high level of support given the fragmented nature of the company’s shareholder base,” Adcock said in the statement. “Only a limited number of requested shareholder undertakings are still to be received.”

CFR has faced competition from London-based private equity firm Actis LLP and Bidvest Group Ltd. (BVT), a Johannesburg-based food and car sales company, in the battle to control Adcock.

CFR, which sold shares to the public in Santiago in 2011, bought Laboratorio Franco Colombiano Lafrancol SAS in December for $560 million, giving it the biggest share of the Colombian market.

To contact the reporters on this story: Chris Spillane in Johannesburg at cspillane3@bloomberg.net; 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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