The board of Tiger Brands on Friday announced it is evaluating all options with regards to the separation of the company’s healthcare interests, which operate under the name of Adcock Ingram.
These options include the potential sale, or unbundling and separate listing of the pharmaceutical and hospital products businesses, either individually or on a combined basis.
Nick Dennis, chief executive of Tiger Brands, said the board has completed a strategic review of the healthcare interests and taken an in-principle decision to exit the Adcock Ingram business.
“Following a careful and considered evaluation by the board, we have come to the conclusion that Tiger Brands will be best positioned to maximise shareholder value by focusing on its core fast-moving consumer-goods business and exiting the pharmaceutical and hospital products businesses.”
Dennis said that following the board’s evaluation, it has mandated UBS South Africa to assist it in considering all options regarding the future of the Adcock Ingram business. The Consumer Healthcare (personal care, baby care and homecare) business will remain a part of Tiger Brands due to its strong, fast-moving consumer-goods (FMCG) focus.
“The board is evaluating the best manner to enhance shareholder value. This decision is an important step in our strategy to build Tiger Brands into a world-class FMCG company.”
Dennis said Adcock Ingram is a successful business with a strong track record of profitable growth, with turnover and operating income growing at a compound average growth rate of 16% and 17% a year respectively over the past three years.
“Adcock Ingram is a business we are extremely proud of and has over the years been a natural fit within the Tiger Brands group. Although Adcock Ingram is well positioned for continued growth, the board recognises that the characteristics and growth prospects of a healthcare business differ from those of a focused FMCG company.”
As a consequence, Dennis said the board believes that shareholder interests will be best served through a separation of the two businesses. “This will allow the businesses to be valued independently of each other.”
At this stage, the board has placed no timeline on a decision with regards to the exact method of separation of the company’s healthcare interests. Dennis said shareholders will be notified of any new developments in due course.
“We are carefully assessing all our options which will best serve the interests of our shareholders. We will keep them informed of any further developments.”
Shareholders are advised to exercise caution in their dealings in the company’s securities until such time as a further announcement is made. — I-Net Bridge