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South Africa pension fund thinks Bidvest's bid for Adcock Ingram is too low - source

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(Credit: Reuters) A man walks past the Adcock Ingram offices in Johannesburg.Adcock Ingram
December 5
3:26 PM 2013

On Thursday, a source familiar with the thinking of the fund said Public Investment Corporation will not be divesting its stake in Adcock Ingram. The offer of the potential buyer, Bidvest, was said to be lower and could hamper the local conglomerate's attempt to block a takeover offer. The state pension fund of South Africa is the biggest shareholder at 19% ownership stake in the drugmaker. PIC already rejected an earlier offer from Chile's CFR Pharmaceuticals amounting to USD1.2 billion.

The unnamed source, who refused to be named as the matter is still private, said, "The PIC is not going to be part of the Bidvest offer because 70 rand per share undervalues Adcock."

Adcock, a pharmaceutical company, operates on two divisions focused on healthcare and medicine. The company has a market capitalization of around ZAR9 billion and owns a 10% market share in South Africa's private pharmaceutical industry.

CFR, which is based in Santiago, has put up a cash and share offer to acquire Adcock, the second-largest drugmaker in South Africa. The offer by CFR would have put Adcock's value at about ZAR73.51 per share, which is based on the fixed price of CFR's new shares.

This week, Bidvest had partnership with Community Investment Holdings, a black investment group to offer an acquisition bid valued at ZAR4 billion or USD383 million for one-third of Adcock.

The bid put up by CFR requires approval from Adcock's shareholders who own a total of 75% of the drugmaker's shares at a December 18 meeting. Should Bidvest's bid is favorable to shareholders and acquire the required number of votes, the former will be able to block CFR's attempts to acquire Adcock.

On trading day today at 1310GMT, Adcock's shares increased 0.5% at ZAR70.61 per share. However, the stocks of the drugmaker was seen as an underperformer against a 1.2% gain of JSE All-share index.

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