Decision on Adcock offer imminent, says CFR

Chile's CFR Pharmaceuticals South Africa completed due diligence of the Johannesburg-based maker of hospital products and medicines, Adcock Ingram, in mid-August, and is now "doing a thorough review of all data to see if we move to the next binding step," said its chief executive Alejandro Weinstein in an interview at CFR’s headquarters in Santiago on August 30.

"At this stage, we have to be very rational. No decisions can be done only by gut feeling."

CFR said in July that it signed a non-binding agreement to buy Adcock in a cash-and-shares deal that values the South African company at a potential $1.3-billion, or R73.51 a share. The offer has prompted a rival bid from Actis LLP, a London-based private-equity firm, two people familiar with the matter said on August 13.

Bidvest Group, a Johannesburg-based food and car sales company, had a bid for 60% of Adcock rejected in March and its pursuit remains a "work in progress," financial director David Cleasby said on August 26.

"If there are other bidders it’s a good sign," Weinstein said. His company has exclusive negotiating rights, he said.

"It means that we are aiming for something good. I would be more concerned if there weren’t other interested parties."

Shareholder opposition
CFR said in the July statement that it planned to finance the Adcock deal with a $750-million share sale, $500-million of debt and $50-million of cash.

Any unsubscribed shares would be listed in Johannesburg and given to Adcock investors, a clause that has been opposed by some shareholders who said such an arrangement may overvalue CFR.

Adcock shares traded at R66.10 at the close in Johannesburg on August 30, 10% below the potential value of the CFR proposal. "If and when we move to the binding offer, we’ll disclose the final details of how much we plan to pay in cash and how much in shares," Weinstein said.

Adcock didn’t immediately reply to an e-mail seeking comment today. – Bloomberg

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