A South African shipping company is making a run at taking control of Adcock Ingram, the country's second largest drugmaker, and given its board until next week to decide if it is onboard with the deal. South Africa is a growing drug market, and this unsolicited offer comes even as India's Cipla is angling for control of the next biggest player there.
Bidvest Group late last week made what Bloomberg says is a R6.2 billion ($670 million) offer for 60% of Adcock Ingram. Bidvest already owns a 2.54% stake, according to a notice from the drugmaker. The New Age reports that if the board does not recommend the offer to its shareholders, Bidvest intends to get hostile by taking it to them directly. Adcock said in its notice that it is evaluating the offer, and Bidvest told Bloomberg it would not comment beyond its offer letter.
An unnamed analyst told The New Age that the offer comes at an opportune time. Adcock Ingram is the country's second-largest drugmaker behind Aspen. Its shares, however, have been underperforming those of Aspen and Cipla Medpro after it spent money to expand its manufacturing. That was done in anticipation of increased production, and revenues, because it has a government contract to make HIV medicines as part of the country's expansion of its national health insurance program.
South Africa is the continent's largest economy, with a growing middle class, factors that have attracted growing interest in its drug market. Aspen has been expanding, even outside of the country. India's Cipla is trying to gain control of Cipla Medpro, the third largest drugmaker, and recently upped its bid to about $500 million to get its ownership to 51%. Sandoz, the generic unit of Novartis ($NVS), also recently announced plans to expand its manufacturing in South Africa to take advantage of the growing market.