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Bidvest's R6bn Adcock bid turns hostile

Apr 04 2013 08:53

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 statement. 

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 Securities.

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 data.

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.


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