* Raises per-share price to 10 rand from 8.55 rand
* Cipla Medpro shares up 1 pct, slightly below offer price
(Recasts, adds more details on price)
By Kaustubh Kulkarni and Tiisetso Motsoeneng
MUMBAI/JOHANNESBURG Feb 28 Indian drugmaker
Cipla Ltd offered over $500 million to buy out South
African affiliate Cipla Medpro on Thursday, sweetening
its bid by 17 percent after earlier talks stalled over price.
The board of Cipla Medpro, South Africa's third-largest
generic drug firm, urged shareholders to vote for the cash
offer, endorsing a deal that appeared to have fallen apart just
In November Cipla offered $215 million for 51 percent of the
company, a price some analysts in South Africa said was too low.
Cipla said in a statement on Thursday it would offer 10 rand
per share, up from its initial bid of 8.55 rand and valuing the
company at around 4.5 billion rand ($508 million).
The offer represents a 30 percent premium to the last
closing price before deal talks were first announced.
The acquisition, which would be the largest ever by an
Indian company in South Africa, would give Mumbai-based Cipla a
platform for expansion into the fast-growing continent, where
demand for inexpensive drugs is soaring.
"With a 100 percent buy-out plan, Cipla will have good
operational synergies in the African market," said Siddhant
Khandekar, an analyst at ICICI Direct in Mumbai.
"However, it is difficult to predict if the payback would
Cipla supplies the bulk of the South African company's drugs
through a long-standing agreement, however it has never owned a
stake in the Cape Town-based company.
"South Africa is an attractive emerging market with strong
projected growth for generics of approximately 14 percent per
year for the next several years," Cipla Chief Executive Subhanu
Just days after the initial offer, Cipla Medpro won a 1.4
billion rand contract from the South African government to
supply HIV/AIDs drugs to local hospitals, sending its shares
above the offer price on speculation of a sweetened bid.
Cipla may have initially been reluctant to hike its offer
given management turmoil at the South African firm.
Cipla Medpro's founder Jerome Smith quit as chief executive
in October following accusations he had awarded himself bonuses
and other payments without board approval.
The deal will require shareholder approval at a meeting in
April, as well as approval from South Africa's government, which
has scuppered cross-border deals in the past.
Cipla Medpro shares were little changed at 9.61 rand at 1148
Cipla was advised by Morgan Stanley, while Absa
Capital advised Cipla Medpro.
(Editing by David Dolan and Helen Massy-Beresford)