The planned transcontinental marriage between South America's CFR and South Africa's Adcock Ingram had been on shaky ground for some time. But the engagement has been officially dissolved, thwarted by a jealous shareholder. The question now is whether the drugmaker will be forced back into the arms of a suitor it has already spurned.
The two companies issued a statement saying, "there is no prospect" that CFR's offer would be approved by the necessary 75% of shareholders, Reuters reports. That leaves Adcock, which has trailed South African competitors, looking at a pairing with Bidvest, a minority shareholder and shipping conglomerate that wants to wrap Adcock's drug portfolio into its myriad operations.
Adcock's chairman, Khotso Mokhele, spurned Bidvest's takeover offer last year when the conglomerate launched an unsolicited bid for a 60% stake. Instead, Adcock said a merger with CFR could help it compete with larger, better financed competitors and bolster its business with access to emerging markets. Bidvest, on the other hand, has a reputation for snatching up struggling companies and turning them around through cost-cutting and other measures.
But Adcock's largest shareholder, South Africa's state-run Public Investment Corporation (PIC), didn't like the idea of a South African company merging with a foreign one, especially one offering primarily shares. It rejected even a revised bid from CFR that boosted its offer by 1.6% to 12.8 billion rand ($1.2 billion). "Our message is clear: We want cash, we don't want their shares," PIC CIO Daniel Matjila told Reuters at the time. That solid opposition killed the deal.
- read the Reuters story