* Top Adcock shareholder says wants cash
* Fund rejection could torpedo $1.2 bln deal
* Chilean suitor criticises "mixed messages"
(Recasts, adds comment from CFR, background)
By Tiisetso Motsoeneng
JOHANNESBURG, Dec 15 South Africa's state
pension fund on Sunday rejected a sweetened offer for drugmaker
Adcock Ingram, likely derailing a $1.2 billion bid by
Chile's CFR Pharmaceuticals to enter fast-growing
The rejection of the deal by the state-run Public Investment
Corporation (PIC), Adcock's top shareholder, could signal
victory for local firm Bidvest Group, which has
launched a counter offer for a little over a third of Adcock.
Santiago-based CFR on Friday lifted its cash and share bid
for South Africa's second-largest drugmaker by 1.6 percent to
12.8 billion rand ($1.2 billion) to woo the PIC.
"This new offer doesn't change much. It's a small increase,"
PIC Chief Investment Officer Daniel Matjila told Reuters on
Sunday. "Our message is clear: we want cash, we don't want their
CFR, which is looking to build an emerging markets
pharmaceutical powerhouse, needs backing by shareholders holding
75 percent of Adcock for the deal to go through.
Bidvest, a sprawling conglomerate whose businesses include
car sales and catering, has increased its Adcock stake to about
7 percent, enough to torpedo the deal when combined with the
PIC's 19 percent.
Bidvest founder and Chief Executive Brian Joffe has a
history of buying underperforming companies and turning them
around by cutting costs and leveraging his group's vast customer
The PIC is also the top shareholder in Bidvest, leading to
some speculation Bidvest is working with the PIC to block the
Chileans, something Joffe has denied.
Bidvest has gone straight to shareholders with a cash offer
of 70 rand a share, aiming to take about a third of Adcock.
CFR is offering 74.50 rand worth of cash and shares for each
Adcock share, based on a value of 2.334 rand per new CFR share.
The final ratio of cash to shares will only be determined after
a pending rights issue by CFR.
CFR STRIKES BACK
CFR Chief Executive Alejandro Weinstein responded to
Matjila's comments by slamming the PIC for sending "mixed and
"We have not been given any clarity around what the PIC
regards as the fair or acceptable value for Adcock," Weinstein
said in a statement, adding his company would continue to try to
persuade the fund on the merits of the deal.
Reuters could not reach Matjila for comment on Weinstein's
The deal has been acrimonious, with Weinstein and Bidvest's
Joffe sparring in the media over the merits of their offers.
Bidvest has also taken to a high court against the deal,
arguing that aspects of CFR's planned funding for the takeover
violate South African companies law, which CFR has denied and
said it would oppose in court.
CFR has said the deal would add around 8 billion rand in
foreign direct investment, which would be positive for the rand
Other government departments, including the influential
Department of Trade and Industry, have backed CFR's offer,
citing the increased investment into Africa's largest economy.
The PIC's stance could reinforce the perception that South
Africa is not always friendly to cross-border deals. The
government has scuppered acquisitions by overseas companies in
the past, especially if they are seen as less than beneficial
for the country's black majority.
CFR's CEO has already said his company's bid for Adcock is
"fully compliant" with black empowerment regulations.
Adcock has struggled in recent years, eclipsed by domestic
rival Aspen Pharmacare which has made an aggressive
push into overseas markets.
($1 = 10.3098 South African rand)
(Reporting by Tiisetso Motsoeneng; Writing by David Dolan;
Editing by Louise Ireland and Sonya Hepinstall)