Adcock Board Says It Can’t Back Bidvest’s $670 Million Offer

Adcock Ingram Holdings Ltd. said it had “legal and material” concerns with Bidvest Group Ltd.’s offer to raise its stake in the drugmaker to 60 percent and would not recommend it to shareholders in its present form.

“No firm intention announcement has been made and no regulated timetable has been initiated,” Johannesburg-based Adcock said in a statement today. “No guidance has been provided by Bidvest regarding the potential benefits and areas of synergy that may arise.”

Bidvest offered to pay 6.2 billion rand ($673 million) to increase its stake in Adcock to a controlling 60 percent, Adcock said in a statement on March 22. The offer was half in cash at 65 rand a share and half in stock at a ratio of one Bidvest share for every four Adcock shares.

The offer values Adcock at 62.69 rand a share, 4 percent higher than the 60.24 rand price at the 5 p.m. close in Johannesburg and an 11 percent premium to the closing price on March 20, the last trading day before the offer.

“We are just about to enter a new phase of the company where shareholder value will be unlocked,” Adcock Chairman Khotso Mokhele said in a phone interview. The maker of Panado painkillers and Corenza cold medicine has “highly reputed brands” and would be increasing its geographic reach into countries including Nigeria, he said.

’Not Over’

“The opportunity for Adcock shareholders to consider the offer” doesn’t depend on a recommendation from the board, Johannesburg-based Bidvest said in a statement earlier today, before the Adcock board had announced its decision.

“It’s not over yet,” said Mark Hodgson, an analyst at Cape Town-based Avior Research Pty Ltd., in a phone interview. “Bidvest has management that moves fast. They are experienced dealmakers. They aren’t going to give up unless they see they won’t have enough support from minority shareholders or are forced to pay high prices.”

Adcock’s shares fell 2.2 percent after the announcement that it would not recommend the offer, its biggest intraday declines in more than two weeks, and closed down 0.6 percent, valuing the company at 10.6 billion rand. Bidvest fell 0.4 percent.

Bidvest, a conglomerate with interests from car sales to food services and coal export terminals, operates across Africa, Asia, and Europe. The company earned 57 percent of its trading profit in South Africa in the six months through December, according to an earnings report.

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