Johannesburg - South African conglomerate The Bidvest Group [JSE:BVT] said on
Wednesday it was willing to go hostile with a R6bn offer for control of Adcock
Ingram Holdings [JSE:AIP] after the drugmaker's board snubbed its bid.
The board of Adcock, a struggling manufacturer of pain
killers, on Tuesday slammed Bidvest's offer for a 60% stake as
"opportunistic" and lacking sufficient details for it to make
recommendation to shareholders.
But Bidvest fired back by making a direct appeal to
shareholders, signaling a rare hostile bid from the conglomerate and its Chief
Executive Brian Joffe.
"Bidvest still believes that Adcock shareholders be
given the opportunity to vote on the offer," the company said in a
Bidvest also denied its proposal lacked legal details,
saying its offer had been approved beforehand by the takeover regulator.
"It definitely has an aggressive tone to it. It's now
become a tit-for-tat situation with Bidvest effectively saying Adcock is lying
about the issues they raised," Alec Abraham, an analyst at Vunani
Sometimes called "the General Electric of South
Africa", Bidvest has a reputation of buying underperforming assets that
can benefit from its vast distribution network and customer base.
But it has overwhelmingly relied on friendly takeovers in 18
previous transactions stretching back to 1999, according to Thomson Reuters
Adcock has underperformed rivals both operationally and in
stock market terms in recent years, but it has said investments in factories,
acquisitions and distribution partnerships with global drugmakers have set it
up for growth.
Bidvest's cash and share offer values Adcock at around R61
per share, or about 20% below its intrinsic value according to Thomson Reuters
StarMine, which takes into account future growth prospects.
The deal, if concluded, would give Bidvest a substantial
presence in the generic market, which is set to take off as the government
prepares a national health insurance plan which relies on the use of cut-price
versions of branded drugs.
Shares in Adcock closed 0.4% lower at R60 while Bidvest gave
up 1.1% at R238.85.