CFR Raises Bid for Adcock by 2% to Convince Biggest Investor

CFR Pharmaceuticals SA, Chile’s largest drug developer, raised its offer to buy South Africa’s Adcock Ingram Holdings Ltd. by 2 percent and said it’s confident the company’s biggest shareholder will accept the deal.

CFR increased its cash and stock bid to 12.8 billion rand ($1.2 billion) from 12.6 billion rand, with a minimum of 50 percent to be paid in cash, Johannesburg-based Adcock said in a statement today. The revised CFR offer values the company at 74.5 rand a share to 75.78 rand a share, Adcock said.

The Public Investment Corp., a manager of South African civil servant pension funds which holds almost 20 percent of Adcock, hadn’t given its support for the previous CFR deal. PIC was seeking an all-cash offer of as much as 74 rand, a person familiar with the matter said Dec. 5.

“We have been engaging with the PIC,” CFR Chief Executive Officer Alejandro Weinstein told reporters on a conference call. “We are quite confident that the new offer will satisfy the requirements of the PIC.”

Adcock shares rose as much as 2.8 percent, the most on an intraday basis in almost a month, and traded 1.3 percent higher at 70.90 rand as of 4:14 p.m. in Johannesburg. About 2.5 million shares traded, or more than three times the three-month daily average.

“This new offer doesn’t really move the needle,” Mathew Menezes, an analyst at Avior Research, said in a phone interview. “It is a punchy price considering where Adcock earnings are, but if you consider the earnings are in a trough, then I wouldn’t say CFR are overpaying.”

Critical Factor

A consortium led by Bidvest Group Ltd., South Africa’s second-biggest company by revenue, made an all-cash offer of 70 rand a share to buy a 34.5 percent stake in Adcock on Dec. 2. Shareholders were scheduled to vote on Santiago-based CFR’s previous bid on Dec. 18. A new date for the meeting will now be scheduled for about the end of January. Both CFR proposals have been recommended by the Adcock board.

CFR’s decision to make a revised offer had nothing to do with Bidvest’s counter approach, Weinstein said. The original bid had “amazing support” from investors with more than 8,000 smaller shareholders backing the deal.

“I have plenty of patience in engaging with the PIC,” Weinstein said. “We have been doing so for several months now and this is the critical factor for this deal to go through.”

Nomzamo Petje, a spokeswoman for the PIC, declined to comment. Julian Gwillim, a spokesman for Bidvest, didn’t immediately respond to calls seeking comment.

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