* Increased stake allows Bidvest to have say in Adcock
* Adcock shares fall by more than 3 percent
* Adcock to hold urgent talks with Chilean suitor CFR
* Adcock says H1 profit likely to fall at least 20 pct
(Adds additional comments from Bidvest CEO)
By Tiisetso Motsoeneng
JOHANNESBURG, Jan 31 South Africa's Bidvest
has raised its stake in drugmaker Adcock Ingram
to more than 34 percent, enough to block a rival $1.2
billion bid and prompt Adcock to seek urgent talks with its
Bidvest's move - announced just hours before the start of
Adcock's annual general meeting - is likely to end months of
wrangling with Santiago-based CFR Pharmaceuticals over
control of South Africa's second-largest drugmaker.
Bidvest Chief Executive Brian Joffe wants Adcock's portfolio
of over-the-counter medicines and a chance to turn around
another underperforming firm.
CFR is looking to build an emerging markets pharmaceutical
powerhouse by adding fast-growing Africa to its operations in
Latin America and Asia.
It has bid 12.8 billion rand ($1.2 billion) in cash and
shares for the drugmaker, an offer backed by Adcock's board but
requiring approval of shareholders owning 75 percent of the
"It's over," Joffe told Reuters, adding that Bidvest had
bought 34.5 percent of Adcock from shareholders for 4 billion
rand in cash.
Adcock said its board "cannot envisage a realistic basis"
for approving the deal with CFR and that it would hold urgent
talks with its suitor to discuss the fate of the Chile-South
Adcock, which has suffered from weak sales and an
over-reliance on its home market, also on Friday warned that
first-half profit would likely fall at least 20 percent.
"The CFR bid is not going to get approval. It has two
options: walk away or go hostile," Alec Abraham, an analyst at
Afrifocus Securities, said.
"But if CFR goes hostile, it would be difficult for it to
bed down the deal and get synergies out when working with a
hostile shareholder. So my guess is CFR will walk away."
CFR officials could not immediately be reached for comment.
Adcock shares were down 3.05 percent at 67.86 rand at 1428
GMT. That was well below CFR's bid of 74.50 rand worth of cash
an its own shares, an indication that investors think the bid is
likely to fail.
The 66-year-old Joffe, who has built a reputation as a canny
dealmaker, was rebuffed by Adcock last March when he tried to
buy a controlling stake, aiming to add painkillers and
prescription medicine to Bidvest's more than 300 businesses
ranging from freight and auto sales to frozen food.
Bidvest bought the bulk of a record 39 million Adcock shares
traded on Thursday, reaching its target three days before the
offer was due to close next Tuesday.
It is not clear whether Bidvest will raise its stake
further. Joffe is widely expected to make a full buyout offer,
given that he previously tried and failed to acquire control.
He declined to say if Bidvest would attempt to buy a
majority stake in Adcock, saying he was happy the increased
stake would allow him to have a say in where company is headed.
"We should now have some strategic input into the company.
We are optimistic about the prospects of the company," Joffe
said on the sidelines of Adcock's annual general meeting.
If his holding reaches 35 percent, he would be forced to
make an offer to minority shareholders, according to
Johannesburg Stock Exchange rules.
Adcock shareholders are due to vote on the CFR deal next
In addition to Joffe, South Africa's state-owned Public
Investment Corporation (PIC) has said it opposes the CFR offer.
The PIC, which owns 22 percent of Adcock, has said it
doesn't want CFR shares because it wants to benefit directly
from improvements at Adcock.
The PIC is also the top shareholder in Bidvest, leading to
some speculation Joffe is working with the state pension fund to
thwart CFR, something he has denied.
Adcock has suffered from lacklustre sales, inefficient
distribution and an over-reliance on its home market.
Some analysts say it would make a good fit for Joffe, whose
reputation for turning around underperforming companies stems
from a focus on cash flow, capital allocation and returns.
($1 = 11.1490 South African rand)
(Writing by David Dolan; Editing by Mark Potter and Erica