PIC hits back at Chilean Adcock bidder

2013-12-22 14:00

The battle for drug company Adcock Ingram has turned somewhat bitter, but not between rival bidders Bidvest and Chilean pharmaceutical company CFR, as one might have thought.

Instead, it’s between CFR and Adcock’s biggest shareholder, the Public Investment Corporation (PIC).

CFR increased its cash portion of the offer to Adcock shareholders from R73.51 to R74.50 last week in a bid to placate the PIC, according to CFR chief executive Alejandro Weinstein.

PIC chief executive Elias Masilela hit back at CFR on Friday, saying the corporation was opposing the deal because it believed a lot more value could be extracted for Adcock shareholders through changes in how the company is managed.

He said: “The offer by CFR to pay current Adcock shareholders a combination of its shares and cash reduces the potential for current Adcock shareholders to benefit fully from any turnaround in Adcock’s financial performance.”

Earlier this week, Weinstein released a statement directed at the PIC, accusing it of protectionism.

“The impression created is that the criticisms levelled at our offer by the PIC have little to do with the commercial merits and are instead intended to allow a local buyer to succeed over a foreign buyer,” said Weinstein.

Masilela rubbished these claims, saying the PIC does support foreign investment as long as there are predictable long-term benefits for the local economy. Masilela cited the recent Barclays-Absa and Walmart-Massmart deals as examples.

Masilela also said that CFR was mainly controlled by the Weinstein family introduced risk into the investment, “especially considering the short listing history of CFR on the Santiago Stock Exchange”.

On Wednesday, the Adcock board voted to postpone the decision around the new revised offer in spite of the PIC opposing the postponement.

But the PIC is not the only one giving CFR a headache. Rival bidder Bidvest launched a legal challenge against CFR on the funding structure of the deal.

Bidvest, which had bid for Adcock earlier this year but had its offer rejected, returned to bid with a consortium including Community Investment Holdings (CIH) to offer shareholders R70 a share to acquire up to 34.5% of the issued shares of Adcock.

Bidvest has alleged that CFR needs a guarantee from Adcock to finance a loan required to complete the deal. But Weinstein denied this, saying the deal is fully funded and the capital has been raised with cash and bank loans.

The vote on the CFR deal has been postponed to next month.

CIH executive chairperson Anna Mokgokong maintains that CFR does not have the required 75% for the deal to go through and that the Chilean company is in denial and simply postponing the inevitable.

“This postponement provides us time to increase our shareholding more. It’s going to be increasingly difficult for them [CFR] to meet the 75%,” Mokgokong said.

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