Adcock Shareholders Postpone Vote on CFR Pharmaceuticals Bid

The decision by about 68 percent of Adcock Ingram Holdings Ltd. (AIP) shareholders to postpone voting on a purchase bid by CFR Pharmaceuticals SA (CFR) shows the deal doesn’t have the necessary backing, Momentum Asset Management said.

“With 75 percent support needed for the bid to go through, it’s looking like the deal is in trouble,” Wayne McCurrie, a money manager at Momentum, which doesn’t hold Adcock shares, said by phone from Johannesburg. “That CFR had to increase the price and postpone today’s meeting shows that it’s struggling to get enough support.”

CFR raised its offer to buy Adcock, the Johannesburg-based maker of Panado painkillers and Corenza cold medicine, by 2 percent to 12.8 billion rand ($1.2 billion) on Dec. 13. The bid, with a minimum of 50 percent to be paid in cash, values each share in the company at 74.50 rand to 75.78 rand, Adcock said.

A group led by Bidvest Group Ltd. (BVT), South Africa’s second-biggest company by revenue, made an all-cash proposition of 70 rand a share to buy a 34.5 percent stake in Adcock on Dec. 2.

Adcock recommended last week that shareholders vote to adjourn today’s meeting to vote on CFR’s previous offer. The gathering will now be held about the end of January.

David Unterhalter, counsel for the Bidvest-led group, argued against today’s adjournment.

“What the board should do is liberate the company from its current state of limbo and allow other offers that may have a better chance of success,” Unterhalter said in Johannesburg. “The adjournment simply delays resolution.”

The Adcock board isn’t captive to the CFR offer and is open to any approach that is made in good faith and is deemed to create shareholder value, Adcock Chairman Khotso Mokhele said at the meeting.

The Public Investment Corp., the largest shareholder with almost 20 percent of Adcock’s stock, last week said it won’t support the new proposal.

Adcock shares rose 0.2 percent to 70.25rand by the close in Johannesburg. The stock has climbed 25 percent since Bidvest’s first cash and shares offer on March 22. That compares to a 43 percent increase in larger competitor Aspen Pharmacare Holdings Ltd. (APN)

To contact the reporters on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net; Christopher Spillane in Johannesburg at cspillane3@bloomberg.net

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

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