Bidvest Group Ltd. offered to pay about 6.2 billion rand ($670 million) to amass a 60 percent stake in Adcock Ingram Holdings Ltd. and take a stronger foothold in the hospital products and medicines market.
Bidvest, which operates businesses from cleaning and car sales to coal export terminals, offered to buy out shareholders half in cash at 65 rand a share and half in shares at a ratio of one Bidvest share for every four Adcock, Johannesburg-based Adcock said in a statement today.
That values each Adcock share at 61.63 rand, a premium of about 9 percent on the March 20 closing price, according to Bloomberg calculations. The 60 percent stake includes the 2.54 percent Bidvest already owns, Adcock said.
Adcock rose as much as 12 percent to 63.11 rand and was up 11 percent at 62.36 rand as of 11:34 a.m. in Johannesburg, giving the company a market value of 10.9 billion rand. About 1.65 million shares traded, or 3.4 times the three month daily average. Bidvest, which is also based in Johannesburg, fell 2.6 percent to 233.04 rand, the biggest decline in almost a month.
“This is definitely good news for Adcock,” Mathew Menezes, an equity analyst at Avior Research, said by phone from Johannesburg. “Adcock needed a shareholder of reference, it needed this catalyst.”
Adcock, which sells Panado painkillers and Corenza cold medicine, said in November full-year earnings fell because of rising production costs and a weaker rand. Adcock, which was a unit of Tiger Brands Ltd. until 2008, has been expanding in Africa as the continent’s demand for medicines grows.
Bidvest said earlier this month it expected to maintain double-digit earnings growth in the first half of 2013 as the economy improves. It offered to buy shares in household appliance maker Amalgamated Appliance Holdings Ltd. last year and also struck a deal in Chile.
A spokeswoman for Adcock who works for Brunswick group declined to comment beyond the statement when contacted by phone. Bidvest Chief Executive Officer Brian Joffe said it was “too early” for any further comment in an e-mailed response to questions.