UPDATE 2-South Africa's Adcock Ingram CEO resigns

Tue Apr 1, 2014 1:30pm EDT

Related Topics

* Louw resigns with immediate effect

* Latest resignation after Bidvest became top shareholder (Adds analyst comment)

By Tiisetso Motsoeneng

JOHANNESBURG, April 1 (Reuters) - South Africa's Adcock Ingram said on Tuesday its chief executive officer has resigned, a widely expected move after the drugmaker's biggest shareholder signalled it wanted a leadership change.

Jonathan Louw, who had been at helm since 2008, will step down with immediate effect, Adcock said in a statement.

Louw is the latest top Adcock official to depart after the firm's biggest shareholder, Bidvest Group, helped oust Chairman Khotso Mokhele in February.

Bidvest earlier this year increased its stake in South Africa's No.2 drugmaker to over a third to block a $1.21 billion Chilean takeover offer for Adcock.

Bidvest has since been pushing through changes, with its Chief Executive Officer Brian Joffe replacing Mokhele as chairman of the struggling firm.

Joffe has an established track record of buying poorly performing companies and turning them around by improving cash flow, capital allocation and returns.

Hit by an over-reliance on the heavily regulated local market and poor distribution networks, Adcock has been dwarfed by its closest domestic rival Aspen Pharmacare, which has made an aggressive push into overseas markets.

Adcock said two weeks ago its quarterly profit was under "extreme pressure" as debt-laden consumers cut back on self medication and the weaker rand pushed up imported raw materials.

Bidvest has publicly criticised Adcock management for the company's poor performance since being spun-off from consumer foods maker Tiger Brands and separately floated in the Johannesburg bourse.

But one analyst said outgoing Louw had not done all that bad since taking over because he inherited a company with aging factories and poor distribution facilities.

"I do not think Jonathan Louw did a bad job. I think that he was dealt a bad hand in terms of the state of the business that Adcock was in after its unbundling out of Tiger Brands," said Jean Pierre Verster of 360ne Asset Management.

"But it is clear that the relationship between Jonathan Louw and the board, specifically Brian Joffe, is probably fractious." (Reporting by Tiisetso Motsoeneng; editing by David Dolan and David Evans)

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