CFR May Seek Other Deals If Can’t Get Adcock Bid Support

CFR Pharmaceuticals SA, Chile’s largest drug developer, may look at other opportunities in emerging markets if it can’t win support for a $1.2 billion approach for South African drugmaker Adcock Ingram Holdings Ltd.

Public Investment Corp., Adcock’s largest shareholder with an 18.6 percent stake, said last week it wouldn’t support the cash and shares proposal because it wasn’t in the investor’s best interests. Adcock needs 75 percent of its shareholder base to back the deal for it to go ahead, its chairman Khotso Mokhele said in September. The company has received support from 45 percent of investors, it said Oct. 30.

“Before getting into this one we were looking at a big opportunity in Mexico that we put in the freezer,” CFR Chief Executive Officer Alejandro Weinstein said on a conference call with reporters in Johannesburg today. “We may review what’s left in the freezer.”

CFR can’t yet say it will walk away from the deal if the PIC doesn’t change its position, Weinstein said. He flew into Johannesburg today to meet with South Africa’s biggest money manager and try to understand why it doesn’t support the offer, he said. A date for a meeting hasn’t been set.

CFR said in July it would pay 12.6 billion rand ($1.2 billion) in cash and shares for Adcock as it seeks to expand in other emerging markets. The company said it would settle as much as 51 percent to 64.3 percent of the purchase through cash and the balance with new CFR shares.

Foreign Ownership

PIC, which oversees the pension funds of South African government workers, would prefer an all-cash offer and doesn’t want CFR shares as part of the takeover package, a person familiar with the fund manager’s decision said today, declining to be named because its discussions about the proposal haven’t been made public. The possibility of Adcock falling under foreign ownership as a result of a takeover by Santiago-based CFR isn’t an issue, the person said. PIC declined to comment.

CFR, which won’t revise its offer, has had support from some members of South Africa’s government, Weinstein said, without naming the government officials.

“The deal has been priced and structured to perfection, trying to satisfy the needs of all the shareholders,” he said.

Adcock declined 0.9 percent to 67.50 rand by close of trading in Johannesburg. The CFR offer values the drugmaker at 73.51 rand per Adcock share, according to both companies.

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