* PIC believes 70 rand per share undervalues Adcock - source
* PIC would 'probably' accept CFR's offer if all-cash-source
(Adds analyst comment, shares)
By Tiisetso Motsoeneng
JOHANNESBURG, Dec 5 South Africa's state pension
fund will not sell its stake in drugmaker Adcock Ingram
to Bidvest, a source familiar with the fund's thinking
said, potentially thwarting an attempt by the local conglomerate
to block a rival Chilean takeover offer.
Bidvest has been trying since March to take control of the
South Africa's second-biggest drug firm Adcock. But
Santiago-based CFR Pharmaceuticals has made a rival
$1.2 billion offer, complicating Bidvest's plans.
Bivest went direct to Adcock shareholders on Monday with a 4
billion rand cash offer at 70 rand per share, aimed at raising
Bidvest's Adcock stake to more than a third from 4 percent now.
If Bidvest gets more than 25 percent, it could block the CFR
deal, which requires approval of shareholders holding 75 percent
of the company.
CFR's bid, which could potentially add 8.1 billion worth of
foreign direct investment to Africa's biggest economy, also
faces a court challenge from Bidvest.
State pension fund the Public Investment Corporation (PIC),
which has also rejected the CFR offer, is the biggest
shareholder in both Adcock and Bidvest. PIC has 18.9 percent of
Adcock and 15 pct in Bidvest.
"The PIC is not going to be part of the Bidvest offer
because 70 rand per share undervalues Adcock," the source, who
declined to be named, said.
PIC was not immediately available to comment.
The PIC would "probably" be willing to accept a rival offer
from Chile's CFR Pharmaceuticals if it were all in
cash, the person said. "As it stands, the PIC will vote against
the CFR offer," the person said.
Santiago-based CFR offered around 73.51 rand in cash and new
CFR shares for all Adcock last month, valuing the company at
about 12.6 billion rand.
The PIC is the latest Adcock shareholder to snub Bidvest's
offer after three other shareholders this week told Reuters the
Chilean company's offer was the only one that fairly valued
Adcock and had clear industrial logic.
Shareholder advisory firms ISS and Glass, Lewis & Co. have
also advised clients to vote in favour of the CFR offer, another
person familiar with the matter said.
"With the rand weakening, the real value of the CFR offer is
now closer to 75 rand per share so there's no economic reason
for any investor to accept 70 rand," Jean Pierre Verster, a fund
manager at 36One Asset Management, said.
Bidvest acquired nearly a million shares on its first day of
the offer on Monday, or about 0.5 percent of Adcock's
outstanding shares, raising its stake to just under 5 percent,
chief executive Brian Joffe said on Tuesday.
That puts the PIC and Bidvest's combined stake at nearly 24
percent. CFR's bid needs approval from holders of 75 percent of
Adcock shares at a meeting on Dec. 18.
Adcock shares saw heavy trade for a second straight session
on Thursday, with around 3 million shares changing hands, more
than four times its daily average over the past 30 days.
Shares in Adcock closed 0.5 percent at 70.75 rand by 1310
GMT, largely in line with the JSE All-share index.
The rand currency fell to its weakest point in over
4-1/2 years on Thursday after it broke through key technical
levels as offshore investors dumped local debt.
($1 = 10.4325 South African rand)
(Editing by David Dolan and Jane Merriman)