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Adcock dives after PIC snub

Cape Town - Shares in Adcock Ingram took a beating, diving almost 6% on Wednesday after the Public Investment Corporation (PIC) said its deal with Chile's CFR Pharmaceuticals is not in the best interest of its shareholders.

The PIC holds 18.6% of Adcock.

CEO Elias Masilela said the PIC  has considered the proposal of CFR Pharmaceuticals based on the current terms and available information, "specifically taking a long term view on our investment in Adcock".

"Due to its non-binding nature, the terms of the offer cannot be considered to be final, with some of them still uncertain.

"The PIC Management and Investment Committee has come to the unanimous decision that it is not in the best interest of our shareholding to support the CFR offer in its current form," Masilela said.

The PIC move comes two weeks after four investors in the local drug maker, including two of the top ten shareholders said they would back the R12.6bn offer from CFR Pharmaceuticals.

CFR said in September it would offer up to R75.92 per Adcock share, made up of a minimum of R47.29 in cash and the balance paid in new CFR shares.

At the time Adcock and CFR said in a joint statement that the proposed combination of Adcock Ingram and CFR will create a uniquely diversified emerging markets pharmaceuticals company with listings in Santiago and Johannesburg, targeting a market of over two billion patients across Latin America, Africa, South East Asia and India.

"The combination of CFR and Adcock Ingram is anticipated to generate significant revenue and cost synergies, with an estimated net present value at least R4.4bn.

CFR also said it is committed to growing Adcock Ingram's business in South Africa and Africa, transferring manufacturing capacity to South Africa, preserving and growing jobs and maintaining Adcock Ingram's commitment to broad-based black economic empowerment.

In March, Adcock Ingram snubbed a R6.2bn bid from Bidvest and in July Uk-based private equity firm Actis LLP made a counter bid of R70 per share on condition it gets access to the same information disclosed to CFR.

Reuters reported that the PIC said earlier it would prefer a local owner for South Africa's second biggest pharmaceutical manufacturer. The deal with CFR would bring foreign owners to a key player in the government's ambitious plan to overhaul healthcare.

By 16:20 Adcock share were trading 5.6% down at R67.60, while rival Aspen Pharmacare [JSE:APN] gained 0.36% at R275.99.

 
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