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Cipla Medpro Stock Slumps After Drugmaker Says Talks End

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Aug. 31 (Bloomberg) -- Cipla Medpro South Africa Ltd., a generic drugmaker, rose the most in a year after it said allegations against Chief Executive Officer Jerome Smith won’t have a “financially material impact” on the company.

The stock climbed 5.7 percent to 7 rand at the close in Johannesburg, the steepest gain since Aug. 12, 2011. That pared its decline to 15 percent since the CEO was suspended on Aug. 15.

Cipla shares are “very cheap, but there is still a lot of uncertainty, so it’s hard to know what you are getting for your money,” said Mathew Menezes, an analyst at Avior Research Ltd. in Johannesburg. “You can see this in the share volatility.”

Cipla trades at 9.14 times estimated 2012 earnings, while larger rival Aspen Pharmacare Holdings Ltd. trades at 22.41 times estimated profit.

Cipla said on Aug. 29 that unspecified talks were terminated after it suspended Smith. Cipla didn’t reveal the nature of the allegations against the CEO. A hearing will start on Sept. 6.

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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