Subscribe to our Newsletter


click to dowload our latest edition

CLICK HERE TO SUBSCRIBE TO OUR NEWSLETTER

Banner

Howzit, my Cousin, now let’s talk tachlis

Published

on

ANT KATZ

Business Day reported late last week that the CE of the Chilean pharmaceutical company bidding to buy Adcock Ingram has challenged Bidvest CE Brian Joffe to a “debate between cousins,” on who could do more to add value for Adcock and its shareholders.

Bidvest made a lower offer for Adcock earlier this year and has levelled a range of criticisms against the $1.3bn bid by Chile’s CFR in an apparent effort to frustrate the bid.

Adcock.insidejpgBusiness Day drew an analogy between the “cousin” statement – but were not sure it referred to the fact that the two men were cousins by Jewish faith alone.

RIGHT: The two men certainly display the
same characteristics

Santiago-based CFR’s CE is Alejandro Weinstein, while Joffe’s mother was a Weinstein, “though it is not clear that the two men are in any way related,” wrote Business Day. Jewish Report was not able to contact either man to confirm this.

“I would love to discuss with my cousin in front of the shareholders what is the value proposition,” said CFR’s Mr Weinstein in Johannesburg on Wednesday. “As Mr Joffe has said, let’s put it to the shareholders.”

Earlier in November, CFR submitted a binding cash and share offer for Adcock with a headline value of R73.51. However, the CFR share price has traded up since then so that the bid is currently worth R77.

ALSO READ: PANADO MAY GIVE BRIAN A HEADACHE

 

Bidvest made a R62.80 conditional bid for Adcock earlier this year but was spurned by the Adcock board. It has indicated it may consider making another offer, but CFR has accused Bidvest of running a deliberate campaign to frustrate other bidders so that it can pick up Adcock on the cheap. “We have spent eight months making sure we complied with every law in the country,” Mr Weinstein said on Wednesday.

Mr Weinstein said on Wednesday that the deal would be “transformational” for CFR, which has done more than $600m of acquisitions in other emerging markets since 2010, and has a track record of delivering the synergies it promised. CFR has identified $440m of synergies to be gained from Adcock in the medium term, but Mr Weinstein emphasised on Wednesday that CFR is committed to achieve these by growing Adcock’s revenues, not by cutting costs.

Adcock’s factories are at less than 60% of their capacity while CFR’s have back orders of 10%, so CFR plans to transfer some production to Adcock’s facilities, creating hundreds of jobs and boosting South Africa’s pharmaceutical exports.

PIC originally rejected deal

CFR’s original offer was rejected by the Public Investment Corporation (PIC), which holds 14% of Adcock, but votes 18% of the shares. The PIC also holds 19% of Bidvest. Mr Weinstein said CFR had now had four meetings with the PIC in an effort to address its concerns. CFR had also had constructive meetings with the relevant South African government ministers.

There have also been allegations that the CFR deal would erode South Africa’s tax base, which Mr Weinstein says are unfounded. Adcock would remain a South African company, which would continue to pay tax to the South African Revenue Services, even though it would become a wholly owned subsidiary of CFR, which plans an inward listing on the JSE.

In the short term, the deal would result in capital gains tax being paid by Adcock shareholders, which would flow into the South African Revenue Service’s coffers.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *