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Bidvest Raises Stake in Acquisition-Target Adcock to 34.5%

Jan. 31 (Bloomberg) -- Bidvest Group Ltd., the South African owner of catering and car businesses, achieved its 34.5 percent target stake in Adcock Ingram Holdings Ltd., becoming the favorite to win a 10-month fight for control of the company.

The stock purchase makes Bidvest the largest shareholder in Johannesburg-based drugmaker Adcock, and its stake is now big enough to block a 12.8 billion rand ($1.1 billion) cash and stock bid from Chile’s CFR Pharmaceuticals SA. The Santiago-based company needs support from 75 percent of Adcock shareholders to succeed with its proposal.

Bidvest “is in a position to unilaterally block the approval of the scheme,” Adcock said in a statement today. The board will be “urgently engaging with CFR regarding the implications of these developments.”

Adcock shares declined 3.3 percent to 67.66 rand by the close of trading in Johannesburg, valuing the company at about 11.9 billion rand. A consortium led by Bidvest offered 70 rand per share for 34.5 percent of Adcock on Dec. 2, and Chief Executive Officer Brian Joffe said the following day he eventually wants control of South Africa’s biggest maker of hospital products. The 70 rand offer is now closed, Bidvest said in a statement today.

‘Get Along’

“We would like a strategic role in Adcock,” Joffe said in an interview today. “It’s a bit uncertain of what’s needed from us at the moment, but in next week or so what needs to be done will become clear. We need to look to get along.”

Bidvest made a 6.2 billion-rand offer for a 60 percent stake in Adcock last March that was rejected by the board. CFR made its first non-binding bid in July as it sought to expand its reach in emerging markets.

Adcock has “reasonable certainty” that earnings per share for the six months through March will be at least 20 percent lower than a year earlier, it said in a separate statement today. First-half earnings will be released on or about May 27, it said.

Adcock will work with Bidvest and other shareholders on how to take the company forward, Chairman Khotso Mokhele said at the company’s annual general meeting today. The right management was in place, he said. Andrew Thompson, a director and head of the audit committee who was up for re-election at the meeting, was voted out by shareholders.

Bidvest’s stake increase was largely completed yesterday, when more than 39 million Adcock shares traded, or about 22 percent of its outstanding stock, according to data compiled by Bloomberg. That’s more than 5,000 percent of the three-month daily average.

Management Change

Chile’s largest drugmaker CFR raised its offer for Adcock, which makes Panado painkillers and Corenza cold medicine, by 2 percent to 12.8 billion rand on Dec. 13. The CFR deal is supported by the Adcock board and opposed by the Public Investment Corp., manager of South African civil servant pension funds, which had a 22 percent stake in Adcock as of Dec. 24. The PIC, also Africa’s biggest money-manager, would prefer a change of management, it said Jan. 8.

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.

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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