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Johannesburg - A Chilean group's $1.2bn (R12.6bn) bid for drugmaker Adcock Ingram [JSE:AIP] was challenged on two fronts on Monday, as a group led by Bidvest [JSE:BVT] sought nearly a third of Adcock's shares and launched a court action against the bid.
Bidvest had failed in an attempt to buy control of the nation's No.2 drug firm in March and its new offer would give it a holding big enough to torpedo the rare Chile-South Africa tie up - and possibly launch a fresh attempt at getting control of the underperforming company.
Responding to CFR Pharmaceuticals' bid, which was formally launched last month, Bidvest teamed up with black investment group Community Investment Holdings (CIH) to offer R70 per share to raise its stake to as much as 34.5% of Adcock, for nearly R4bn.
Bidvest already owns 4% of Adcock.
The two, which if successful would emerge with a holding of just below the 35% mark that would trigger a mandatory offer to minorities, also launched a lawsuit to challenge the legal and regulatory compliance of CFR's bid.
"We believe that the consortium has the credentials to add value to Adcock, something which is clearly required," Bidvest founder and chief executive Brian Joffe said in a statement.
Adcock had rejected Bidvest's previous offer for a 60 percent stake as "opportunistic".
Adcock, which has been hit by slow sales and runs behind domestic rival Aspen Pharmacare's push into overseas markets, has said the CFR deal is vital to its survival.
CFR has said the acquisition would create an emerging markets pharmaceutical powerhouse with a presence in 23 countries. Under the CFR offer, Adcock shareholders could receive as much as R47.29 per share and up to 15.44 new CFR shares per Adcock share.
The cash portion would represent nearly R8.1bn in direct foreign investment into Africa's largest economy, a positive for the rand currency. CFR said it believed its offer was the best for the future of the company.
Thanks but no thanks
Some Adcock shareholders were not won over by Bidvest.
"It's clever deal-making by Brian Joffe but at R70 a share for a 34.5% stake, thanks but no thanks," said Jean Pierre-Vester, a fund manager at Johannesburg-based 360ne Asset Management, which has an 1.8% stake in Adcock and has pledged to back the CFR offer.
Another shareholder queried the industrial merits of Bidvest's move. "I don't see the synergistic benefits and value-enhancing elements we saw in the CFR deal," said the shareholder, who declined to be identified but said his fund would vote in favour of the CFR deal.
Yet Adcock's top shareholder, state-owned Public Investment Corp (PIC), has concerns about Adcock passing into foreign hands and about the share portion of the deal, a source familiar with the fund's thinking has said.
PIC, which manages pensions for state employees, is also top shareholder in Bidvest, according to Thomson Reuters data.
Bidvest's offer opens immediately. Shares in Adcock were up 0.5 percent at R70.41 by 15:30 GMT, outperforming a 0.7% decline in the JSE All-share index.
Sometimes called the "General Electric of South Africa" because of its diverse operations, Bidvest has businesses in freight, banking and food services and operates in Europe, Asia, Australia and southern Africa.
The son of Lithuanian immigrants, Joffe has a reputation as a cost-cutter and for buying underperforming companies that can benefit from Bidvest's distribution network and customer base.
Bidvest did not elaborate on the content of its lawsuit over the CFR offer, only saying it would challenge compliance with legal and regulatory aspects of the transaction.
At least one other Adcock shareholder has filed a complaint against the drugmaker with the Johannesburg bourse, saying it had mislead investors about the level of backing for CFR's bid.
To go through, CFR's deal requires approval from holders of 75% of Adcock shares at a meeting on December 18, so if the Bidvest offer is successful it would be enough to vote the CFR deal down and, if it's not, Bidvest could sell them back.
Adcock said in statement it was considering its position regarding Bidvest's new offer and the lawsuit.
Bidvest had failed in an attempt to buy control of the nation's No.2 drug firm in March and its new offer would give it a holding big enough to torpedo the rare Chile-South Africa tie up - and possibly launch a fresh attempt at getting control of the underperforming company.
Responding to CFR Pharmaceuticals' bid, which was formally launched last month, Bidvest teamed up with black investment group Community Investment Holdings (CIH) to offer R70 per share to raise its stake to as much as 34.5% of Adcock, for nearly R4bn.
Bidvest already owns 4% of Adcock.
The two, which if successful would emerge with a holding of just below the 35% mark that would trigger a mandatory offer to minorities, also launched a lawsuit to challenge the legal and regulatory compliance of CFR's bid.
"We believe that the consortium has the credentials to add value to Adcock, something which is clearly required," Bidvest founder and chief executive Brian Joffe said in a statement.
Adcock had rejected Bidvest's previous offer for a 60 percent stake as "opportunistic".
Adcock, which has been hit by slow sales and runs behind domestic rival Aspen Pharmacare's push into overseas markets, has said the CFR deal is vital to its survival.
CFR has said the acquisition would create an emerging markets pharmaceutical powerhouse with a presence in 23 countries. Under the CFR offer, Adcock shareholders could receive as much as R47.29 per share and up to 15.44 new CFR shares per Adcock share.
The cash portion would represent nearly R8.1bn in direct foreign investment into Africa's largest economy, a positive for the rand currency. CFR said it believed its offer was the best for the future of the company.
Thanks but no thanks
Some Adcock shareholders were not won over by Bidvest.
"It's clever deal-making by Brian Joffe but at R70 a share for a 34.5% stake, thanks but no thanks," said Jean Pierre-Vester, a fund manager at Johannesburg-based 360ne Asset Management, which has an 1.8% stake in Adcock and has pledged to back the CFR offer.
Another shareholder queried the industrial merits of Bidvest's move. "I don't see the synergistic benefits and value-enhancing elements we saw in the CFR deal," said the shareholder, who declined to be identified but said his fund would vote in favour of the CFR deal.
Yet Adcock's top shareholder, state-owned Public Investment Corp (PIC), has concerns about Adcock passing into foreign hands and about the share portion of the deal, a source familiar with the fund's thinking has said.
PIC, which manages pensions for state employees, is also top shareholder in Bidvest, according to Thomson Reuters data.
Bidvest's offer opens immediately. Shares in Adcock were up 0.5 percent at R70.41 by 15:30 GMT, outperforming a 0.7% decline in the JSE All-share index.
Sometimes called the "General Electric of South Africa" because of its diverse operations, Bidvest has businesses in freight, banking and food services and operates in Europe, Asia, Australia and southern Africa.
The son of Lithuanian immigrants, Joffe has a reputation as a cost-cutter and for buying underperforming companies that can benefit from Bidvest's distribution network and customer base.
Bidvest did not elaborate on the content of its lawsuit over the CFR offer, only saying it would challenge compliance with legal and regulatory aspects of the transaction.
At least one other Adcock shareholder has filed a complaint against the drugmaker with the Johannesburg bourse, saying it had mislead investors about the level of backing for CFR's bid.
To go through, CFR's deal requires approval from holders of 75% of Adcock shares at a meeting on December 18, so if the Bidvest offer is successful it would be enough to vote the CFR deal down and, if it's not, Bidvest could sell them back.
Adcock said in statement it was considering its position regarding Bidvest's new offer and the lawsuit.
