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Dogged dealmaker Joffe eyes Adcock win

Feb 03 2014 11:30
Bidvest CEO Brian Joffe

Bidvest CEO Brian Joffe (File)

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Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - Brian Joffe, the hard-headed South African entrepreneur, whose empire spans ships to mops, has a favourite saying: "Why go into business to test the waters? Go in to make waves."

The 66-year-old son of Lithuanian immigrants made another splash this week when he fended off a rival bid for Johannesburg's Adcock Ingram after months of jostling for control of the drugmaker.

His rival, Chile's CFR Pharmaceuticals, has offered R12.8bn for Adcock [JSE:AIP]. But Joffe sees another chance for his sprawling Bidvest Group [JSE:BVT] to turn around an ailing firm and access new markets.

The tug-of-war - South Africa's biggest corporate battle in recent memory - was reaching an end on Friday after Bidvest increased its Adcock stake to 34.5%, effectively pushing CFR out of the running.

South Africa's $130bn state Public Investment Corporation (PIC) is a major shareholder in both Adcock and Bidvest, prompting talk that Joffe has been working with the government to thwart CFR. CFR's founding Weinstein family even accused the PIC of protectionism.

CFR's supporters say the Pretoria government is nervous about foreign investment. Adcock's position is particularly sensitive as it supplies many of the drugs to fight HIV/AIDS in South Africa.

But Joffe has denied ganging up with the government to see off CFR.

People who know him describe a straight-talker with a dogged focus on the numbers.

Since 1990, Bidvest's share price has increased 142-fold - Joffe has said it "outscores Jack Welch's GE and Warren Buffet's Berkshire Hathaway as a wealth creator".

He has overhauled companies by focusing on cash flow, capital allocation and returns and encouraging his businesses to work together. Some group companies are cleaned by the cleaning unit and furnished by the furniture arm.

"One thing about Brian is that he's got the ability to grow big companies," said David Shapiro, a veteran stockbroker, who grew up with Joffe.

Freight and frozen food

Joffe has turned a small, apartheid-era venture selling bakery ingredients into an empire totalling more than 300 businesses ranging from freight to frozen food.

Revenue is $15bn and Bidvest employs nearly 140 000 people in its main markets of South Africa, Europe and Asia.

"He can overpay, but he gets more out of a business than the incumbent management. He's very good at making the business focused, and then managing finances and return numbers," said one of his business associates.

"He's a pretty demanding fellow."

Joffe believes Adcock products could provide a further expansion opportunity in sub-Saharan Africa, where economic growth is expected at 6% this year, fuelling consumer demand for everything from cosmetics to painkillers.

"From Joffe's perspective, Adcock is a brilliant asset. It has excess capacity and it gives him the opportunity to move into Africa. He clearly believes it has been inefficiently run," said Roy Mutooni, an analyst at Renaissance Capital.

"He has an eye for undervalued assets and seems to know where the issues are in the acquisitions he's made."

"Joffe premium?"

Yet Bidvest's record is not unblemished: in 2006 it sold its money-losing printing business Lithotech France for a loss of €26m after failing to turn it around.

He also walked away from packaging firm Nampak in 2008 after it issued a hefty profit warning. The company subsequently revived and its share price trebled.

Joffe was candid about his setbacks in a 2009 magazine interview: "There was a time when the Joffe name might have commanded a premium - but that's gone now."

In a more recent interview with CNBC Africa, he seemed annoyed when asked about charges from CFR that his offer for Adcock would only benefit himself.

"That's a bit rich coming from them, seeing that they control about 52% of CFR and I've got about 1% of Bidvest," he said, referring to the Weinsteins, who in fact own around 73% of CFR.

A Johannesburg native, Joffe grew up in the city's close-knit community of Lithuanian Jews, inheriting an immigrant work ethic that helped shape other prominent South Africans such as central bank governor Gill Marcus and Glencore Xstrata CEO Ivan Glasenberg.

In his spare time he is an accomplished photographer and has published a book of African wildlife photos accompanied by inspirational quotes - his own, alongside those of Napoleon and Thomas Edison.

The emphasis on success and tenacity - "building a business is like child's play - one block at a time" - suggests his staying power in the battle for Adcock was no accident.



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