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Adcock Investor PIC Raises Stake to Push Management Shift

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Jan. 8 (Bloomberg) -- The Public Investment Corp. said it raised its holding in South African drugmaker Adcock Ingram Holdings Ltd. in the hope that new management rather than a proposed change of ownership will propel gains in the stock.

“We believe there is a lot of value to be unlocked through better management,” PIC Chief Investment Officer Daniel Matjila said by phone today. “That’s why we are buying the stock at these levels.”

The PIC, a manager of South African civil-servant pension funds that’s also the continent’s biggest money manager, raised its stake in the maker of Panado painkillers and Corenza cold medicine to 22 percent last month from 19 percent. Johannesburg-based Adcock, South Africa’s largest supplier of hospital products, is a takeover target for CFR Pharmaceuticals SA, Chile’s biggest drugmaker, which raised an acquisition offer by 2 percent to 12.8 billion rand ($1.2 billion) on Dec. 13.

CFR’s bid, a minimum of 50 percent of which would be paid in cash, values each share at 74.50 rand to 75.78 rand, according to Adcock.

The PIC said on Dec. 20 that it opposes the CFR proposal as it believes shareholders can get more value through changes in the way the company is run. CFR’s offer reduces Adcock shareholders’ potential to benefit from any turnaround in the company, it said.

Stock Rises

Adcock rose 0.3 percent to 70.25 rand at the close in Johannesburg. The stock has climbed 25 percent since an earlier offer by Bidvest for a 60 percent stake on March 22. That compares to a 45 percent increase in larger competitor Aspen Pharmacare Holdings Ltd.

A group led by Bidvest Group Ltd., a South African owner of businesses that include catering and car dealerships, made an all-cash offer of 70 rand a share for a 34.5 percent stake in Adcock on Dec. 2.

Foord, a Cape Town-based money manager, owns about 15 percent of Adcock on behalf of its clients, according to a stock-exchange statement on Dec. 27. Adcock shareholders haven’t yet been given a date on when to vote on the CFR offer. Shareholders in Santiago-based CFR will vote on Jan. 10 on whether to sell new stock to fund the takeover.

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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