Adcock Ingram vote going down to the wire; The ten most popular reads of the past week

Hi there,

Just after launched, mining entrepreneur Bernard Swanepoel wrote us a piece lamenting how hostile takeovers are so difficult under South African law. Swanepoel, of course, spoke from experience. He was Harmony’s CEO when it launched that hostile bid for Goldfields Limited – but failed because of a system that allowed Goldfields to drag things out.

We may well be witnessing a repeat in the battle for Adcock Ingram between Chilean group CFR and Bidvest’s Brian Joffe. The Chileans have a compelling business case. So strong that they convinced the Adcock board it was the best offer shareholders would ever get.

But Joffe believes in the right hands (his) the pharma group’s assets can perform far better. He is doing his best to convince the deal’s “kingmaker”, the Public Investment Company, of that. Just in case, he’s also launched a court action that could effectively drag proceedings for months.

On Tuesday, Joffe chose our CNBC Africa Power Lunch programme to break his ten month silence on the transaction. It was a fascinating interview, one well worth watching if you didn’t catch it live. The next morning, CFR sent it’s eloquent Harvard MBA Italian Daniel Salvadori to rebuff Joffe’s arguments.

Having engaged closely with both protagonists, although CFR has a compelling business case, Joffe is likely to win this battle. He knows South African law and local politics far better than his South American rivals. Joffe’s other advantages are size (Bidvest is four times the market cap); a credible BEE partner in CIH; and a track record of successful turnarounds.

But probably the best thing to come out of the entire exercise was yesterday’s comments by one of the country’s leading investment strategists, Investec’s Michael Power.

He was forthright in his view that South Africa is treating CFR shoddily; and that if Joffe succeeds, shareholders will lose any chance of forcing a control premium. While Power surely erred by not factoring in a Adcock share price appreciation from R50 to R70 since Joffe’s interest began (ie the control premium) that he was comfortable expressing an opinion so obviously against thee party line says much for his independence. Power’s employer, Investec, is Bidvest’s closest, longest-standing and most trusted advisor.

The week before Christmas promises to be a rather active news-wise.  On the 17th, the disastrous MTN Zakhele listing is due to have a third try at allowing its 120 000 shareholders to trade stock that’s appreciated fourfold in three years. The Adcock vote is on December 18th. With the PIC not having finally committed itself, that could go either way. But the Bidvest consortium did get a boost yesterday when asset manager Oasis tendered its shares taking Joffe’s stake to just under 7%.

Wherever you might be going during the Silly Season, please remember to take with you. We’ll work 24x7x365. And the site renders really well on tablets and smart phones giving you all the interesting stuff that’s happening the week before Santa’s Big Day.

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Past week’s best read articles:

“e-toll Tuesday” looms. The day when SA Government’s will is pitted against its citizens

The Dark Side attacking independent journalism – sanitised “news” explodes as newsrooms contract

After ten months of silence, Brian Joffe opens up on his Adcock Ingram ambitions

Other stories in the Top Ten this week.

Simply great: Charlie Munger’s speech to the Harvard School, June 1986 – “Invert, always invert.”

Tito Mboweni may be your landlord; chairs R6bn company which owns Fourways Mall, lists next month

e-Toll Tuesday: Gautengers avoid the must-pay routes causing chaos on suburban roads

e-Tolls: “An example of how to cock things up” – economist Dawie Roodt (with input from SANRAL’s Nazir Alli)

Joffe shows his hand on Adcock – teams up with Anna Mokgokong’s CIH to offer R70 cash. Bye-bye CFR?

MTN Zakhele’s aborted debut followed directors’ decision to engage foreigners who build forex, CFD – not equity – trading systems

After eight years of legal wranging SAPS Captain Renate Barnard beats the system – and Affirmative Action

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