* Cipla plans 8.55 rand per share bid for 51 pct stake
* Cipla Medpro to express opinion when gets firm offer
* Deal worth $215 mln, 11 pct premium to Tuesday's close
By Tiisetso Motsoeneng and Kaustubh Kulkarni
JOHANNESBURG/MUMBAI, Nov 21 Indian drugmaker
Cipla plans to offer $215 million for a majority stake
in South Africa's Cipla Medpro to strengthen its
presence in Africa's fast-growing market for cheap, generic
versions of branded drugs.
The proposed bid for a 51-percent stake in South Africa's
No.3 drug company highlights international pharmaceutical firms'
growing interest in the continent, particularly as a market for
low price versions of medicines that are off patent.
Cipla, which supplies the bulk of Cipla Medpro's drugs but
has so far not owned a stake in the business, sells generic
drugs to treat HIV and cancer in emerging markets.
The proposal also highlights the rise of so-called
"south-south" deals, where Indian and Chinese firms buy into
Africa, lured by its rising incomes and a surging population.
"Like most industries with a heavy focus on developed
markets, pharmaceuticals are struggling to find growth. Many are
looking to Africa to build up their distribution pipeline," said
Nic Norman-Smith, chief investment officer at Lentus Asset
Management in Johannesburg.
"It's not surprising that Cipla are trying to consolidate
their position in South Africa," he added.
British drugs giant GlaxoSmithKline is also ramping
up its business in Africa, aiming to lift sales volume over the
next five years by cutting prices.
Cipla plans to offer 8.55 rand a share for a 51 percent
stake in Cipla Medpro, the Cape Town-based firm in a statement.
Cipla Medpro said it would express a view to shareholders on the
Indian firm's proposal when it had received a firm offer.
The proposed offer, worth 1.9 billion rand ($215 million)
according to Reuters calculations, is 11 percent above Cipla
Medpro's closing share price on Tuesday and values the company
at around 3.8 billion rand.
Cipla said it would fund the deal via its own cash.
Shares of Cipla Medpro surged 8.6 percent to 8.35 rand in
Johannesburg. In India, shares of Cipla were up 2.5 percent.
20 PCT GROWTH
By revenue, Cipla Medpro has a compound annual growth rate
of around 20 percent, according to Thomson Reuters data.
The supply deal between the two firms was spearheaded by
Cipla Medpro founder and former chief executive Jerome Smith,
who quit last month following charges of gross misconduct for
approving pay rises and bonuses for himself without board
There had been some speculation Smith's departure could
impact Cipla Medpro's relationship with the Indian company.
Cipla director S. Radhakrishnan told Reuters the Indian firm
had looked into the matter before making its offer.
"Obviously we did diligence to understand what the
implications are and how it will impact the company and we are
satisfied," he said.
In one of the biggest deals involving India and Africa,
Indian telecom Bharti in 2010 sealed a $9 billion
acquisition of the African operations of Kuwait's Zain
, while Chinese firms have been aggressive buyers of
everything from banks to mining assets on the continent.
Cipla Medpro is being advised by the investment banking arm
of South Africa's Absa, while Morgan Stanley is
advising India's Cipla.