Cipla Medpro CEO Jerome Smith may be gone, but his plans are not forgotten at the South African company. Weeks after he resigned in a fight with his board over pay raises he treated himself to, the company has finalized his plan to sell controlling interest in the South African company to namesake Cipla.
Indian generics maker Cipla will pay 1.9 billion rand ($215 million) for a 51% stake in Cipla Medpro, South Africa's third-largest drugmaker, Reuters reports. Cipla already supplies most of the drugs that Cipla Medpro sells, but the two have never had any common ownership.
According to the Economic Times, the plan to divest the stake had been been promoted by Smith, Cipla Medpro's CEO before his hasty departure last month. In August, the company suspended Smith over "serious allegations" it declined to specify. It turned out the board was upset because Smith, Cipla Medpro's founder, allegedly gave himself some pay raises and bonuses that the board hadn't authorized. There was also some unhappiness about 45 people he was said to have added to the payroll who weren't actually working there.
With the deal, Cipla secures its footprint in Africa's fastest growing market. And while it will now control the third-largest company there, Cipla also has a relationship with Aspen Pharmacare, South Africa's biggest drugmaker. In August, the two struck a deal to sell products jointly in Australia. Aspen Pharmacare already sells branded drugs there, but this arrangement gives it access to Cipla's vast supply of generics.
- read the Reuters story
- more from the Economic Times
CEO exits as Cipla Medpro details 'gross misconduct' allegations
Cipla Medpro suspends CEO, but won't explain why
Cipla eyes alliances to grow in emerging markets
Cipla, Aspen eye joint excursion in Australia