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UPDATE 1-S.Africa's Bidvest mulls raising Adcock stake to majority
August 21, 2014 / 6:45 PM / in 3 years

UPDATE 1-S.Africa's Bidvest mulls raising Adcock stake to majority

* Bidvest intends to lift holding to over 50 pct -document

* Competition Tribunal blocks job cuts after the deal (Releads with Bidvest intention to increase stake)

By Tiisetso Motsoeneng

JOHANNESBURG, Aug 21 (Reuters) - South Africa’s Bidvest Group intends to raise its stake in ailing drugmaker Adcock Ingram to more than 50 percent, a legal document from the Competition Tribunal showed.

Bidvest, a conglomerate with businesses ranging from food service to auto showrooms, already has a 34.5 percent holding in Adcock Ingram, South Africa’s second-biggest drugmaker.

It is now considering buying more shares to lift its holding to over 50 percent, according to the document obtained by Reuters.

“The Bidvest bid has involved two stages. The second stage is to acquire further shares beyond the 34.5 percent, which presumably, depending on the take-up of the offer, would take Bidvest’s holding to above 50 percent,” it said.

Bidvest went direct to Adcock shareholders in December last year with a 4 billion rand ($371 million) cash offer for the initial 34.5 percent, sinking a rival bid from Chile’s CFR Pharmaceuticals.

Bidvest Chief Executive Brian Joffe has been trying to take control of Adcock since March 2013, seeing a chance to turn around another underperformer and add its portfolio of painkillers to Bidvest’s wide variety of products.

Joffe, whose initial bid for control was spurned, has a long track record of snapping up laggards and turning them around by focusing on cash flow, capital allocation and shareholder returns.

Shares in Adcock are down more than 30 percent so far this year, underperforming a more than 12 percent gain in the Johannesburg’s All-share index.

The competition regulator said on Thursday it had ordered Bidvest to refrain from cutting jobs at Adcock, dealing a blow to the conglomerate’s plan to turn around the ailing drugmaker.

Adcock is trailing rivals such as Aspen Pharmacare as it grapples with slowing sales, over-reliance on a heavily regulated home market and factories that are running below capacity.

Investors are expecting a lot from Bidvest. Some had felt robbed of a payout when it defeated CFR’s bid, which would also have pushed Adcock into fast-growing markets in Latin America and southeast Asia. (1 US dollar = 10.7030 South African rand) (Reporting by Tiisetso Motsoeneng; Editing by David Holmes and Jane Baird)

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