India's Cipla should pay more for Medpro, says top shareholder
JOHANNESBURG, March 12 |
JOHANNESBURG, March 12 (Reuters) - A top shareholder in Cipla Medpro said on Tuesday it would ask India's Cipla Ltd to raise its $500 million offer for South Africa's third-largest generic drugs firm.
Last month Cipla Ltd offered 10 rand a share for 100 percent of the South African firm, having previously offered 8.55 for a simple 51 percent majority stake.
Cipla supplies the bulk of the South African company's drugs through a long-standing agreement but has never owned a stake in the Cape Town-based company.
Just days after the initial offer, Cipla Medpro won a 1.4 billion-rand ($154 million) contract from the South African government to supply HIV/AIDs drugs to local hospitals, sending its shares up to 9 rand per share.
Talking on behalf of Sweet Sensation, which owns just over 18 percent of Cipla Medpro, Peter Moyo said on Tuesday last month's offer lacked a "full buy-out premium" and ignored the big contract win that would increase its earnings power.
"We are still firming up the numbers but I can tell you that our price will be higher than what they have put on the table," Moyo said in a telephone interview.
Shareholders are due to meet on April 30 to vote on the offer that, if approved, would be the largest ever by an Indian company in Africa's biggest economy.
The offer, which has been endorsed by the Cipla Medpro board, appeared to have fallen apart just weeks ago after some analysts also said the initial 8.55 rand per share offer did not reflect Cipla Medpro's enhanced earnings prospects.
However, Sweet Sensation is expected to tread carefully in raising the stakes because Cipla Medpro relies so heavily on the Indian firm's commitment to supply it with medicines.
"We are confident that we can come to an amicable number that would make sense for us and make sense of them as well," Moyo said. ($1=9.1202 South African rand) (Editing by Greg Mahlich)
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