PIC buys more, boosts its Adcock Ingram stake to over 22%. Final nail for CFR bid?

Time for CFR's Alejandro Weinstein to go home to Chile?
Time for CFR’s Alejandro Weinstein to go home to Chile?

Any lingering hope which Chilean group CFR entertained in its pursuit of Adcock Ingram surely ended this morning. The largest shareholder, the Public Investment Company, has been quietly accumulating stock. It announced through SENS that its stake in Adcock is now  22.3%, up from 18.9% stated in the pharma company’s most recent annual report. 

Today’s announcement means that the PIC is now able to single-handedly block CFR’s proposed acquisition. The manager of SA’s public sector employee pension fund now speaks for over 25% of the shares entitled to vote. CFR requires 75% approval for the near R13bn proposed deal to be consummated.

The PIC’s chief executive Elias Masilela issued a statement last week outlining reasons why he was against the transaction. These included the need for CFR to make an all-cash offer rather than the effective R75 cash and share offer tabled by the Chileans.  It has reported that the PIC would require around R90 a share – a suggestion supported by the latest announcement as the fresh investment would have been made around the current R70 price level.

The argument forwarded by counter bidder Brian Joffe and repeated by the PIC is that Adcock Ingram has great assets but poor management. The company’s profits in its most recent financial year to end September were lower than those recorded ahead of its re-listing in 2008. – AH

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