Chilean drug maker CFR threatens to withdraw $1.3 bn bid for Adcock Ingram

Chilean drug maker CFR Pharmaceuticals SA has threatened to withdraw its $1.3 billion bid to buy South African drug maker Adcock Ingram if the target's biggest shareholder does not approve the deal.

In July, Santiago-based CFR, 73-per cent controlled by the family of Alejandro Weinstein, offered to buy Adcock for 73.51 rand per share in cash and shares, or $1.3 billion. (See: S Africa's Adcock Ingram receives $1.3-bn bid from Chile's CFR Pharma)

Adcock Ingram recommended the deal to its shareholders, but the company's largest shareholder, the Public Investment Corp (PIC), the South African government-employee pension-fund with an 18.9 per cent stake, opposed the deal saying that it would prefer a local company buying Adcock Ingram and would not support the deal in its current form.

CFR's threat to withdraw came nearly a week after PIC told Bloomberg that it would not support the deal, although it did not give reasons for its dislike of the proposed transaction.

Johannesburg-based Adcock Ingram began as EJ Adcock Pharmacy in Krugersdorp 120 years ago.  It was listed on the Johannesburg Stock Exchange (JSE) in 1950 before it became a wholly-owned subsidiary of Tiger Brands, and was subsequently delisted in 2000.

After the unbundling from Tiger Brands, Adcock Ingram re-listed on the JSE in 2008.

The company has a market cap of about 9 billion rand and holds a 10-per cent share of the private pharmaceutical industry in South Africa.

Adcock Ingram operates in two areas, pharmaceutical and hospital products business.

It has an extensive range of branded and generic prescription and OTC products across a broad range of therapeutic classes such as, analgesics, allergy, cardiovascular, central nervous system, dermatology, ear/nose/eye preparations, feminine health, gastrointestinal, vitamin, mineral and energy supplements as well as  personal care.

In generics, the company markets a broad range of affordable products under the corporate brand. In branded products, the company markets leading brands such as Adco Dol, Allergex, Bioplus, Citro-Soda, Corenza C, Myprodol, Panado, Syndol, vita-thion and Unique Formulations, as well as other brands on behalf of overseas drug companies.

Adcock Ingram Critical Care is South Africa's largest supplier of hospital and critical-care products, blood systems and accessories as well as products used for renal dialysis and transplant medication.

This business unit has a 60-year partnership with US-based Baxter International.

The South African healthcare market benefits from favourable demographic trends, such as government initiatives to combat HIV/AIDS, sustained growth in the middle class and increased accessibility to healthcare products.

Adcock Ingram has low-cost manufacturing facilities in South Africa and India, whereby it is able to maintain a cost-efficient manufacturing base and through acquisitions and market development.

In July 2012, Adcock Ingram acquired Goa-based Cosme Farma Laboratories, a pan-Indian pharmaceutical company for Rs480 crore ($86 million). (See: South Africa's Adcock Ingram to buy Cosme Farma drug business for Rs480 crore)