CFR boss in South Africa to keep deal in play

By Tamar Kahn


　
THE Public Investment Corporation (PIC) appeared to have gone to ground as CFR Pharmaceuticals CEO Alejandro Weinstein arrived in South Africa on Monday to try keep his company’s R12.6bn offer for local drug maker Adcock Ingram in play.

Mr Weinstein arrived without a confirmed meeting with the PIC, which is opposing his company’s bid for Adcock Ingram.

Last Wednesday, the PIC announced it would not support CFR’s cash and shares bid for Adcock Ingram, but has since remained silent as to exactly what it does not like about the prospective deal, fuelling speculation that its rationale may be as much political as financial.

On Monday text messages sent by Business Day to its CEO, chief investment officer and head of stakeholder relations went unanswered. Nor did its press officer or head of stakeholder relations respond to e-mail queries. It appears that Mr Weinstein is having an equally hard time eliciting more detail on the PIC’s views: he told Business Day last week that he learnt about the body’s position from a Bloomberg news story, rather than being informed directly by the PIC or Adcock Ingram.

And when he briefed reporters in a conference call on Monday afternoon shortly after landing at the airport, he said he had yet to confirm a meeting with the PIC. He had had three previous meetings with the body on previous visits to South Africa, he said, but declined to say what views the PIC had expressed then.

The PIC is Adcock Ingram’s biggest shareholder, with 18.9% of its stock, and dropped a bombshell last week when it announced that it would not support CFR’s bid "in its current form". While it is technically possible for the requisite 75% of Adcock Ingram’s shareholders to vote in support of the deal, Mr Weinstein made it clear that CFR believes the PIC’s support is vital.

"When you are moving the centre of gravity of a company like CFR into South Africa, when you are making a transformational investment, when you are planing to move and shut down production facilities (in Latin America) and invest in South Africa, it is not just a question of having the votes. We would like to have the support of all the individuals that have decision making (power) in the country."

The PIC invests on behalf of the Government Employees Pension Fund and has a dual mandate — to deliver returns and "contribute positively to SA’s development", according to its vision statement.

Mr Weinstein said he had previously met government officials who were supportive of CFR’s bid for Adcock Ingram, which would see the Chilean-based company invest between $20m and $30m in equipment and research and development in South Africa and India, move production of between 300 and 400 products from Latin America to South Africa, and export products made by Adcock Ingram to Latin America and other emerging-economy markets. No other suitor for Adcock Ingram, including Bidvest and private equity firm Actis, could offer it this kind of diversification and long-term shareholder value, he said.

Mr Weinstein reiterated that he was not prepared to change the terms of the deal, which he said had been "priced and structured to perfection".

CFR made a nonbinding offer to acquire 100% of Adcock Ingram’s shares in a cash-and-share mix. Adcock Ingram is getting the equivalent of R73.51 a share, of which 51%-63.4% would be cash, depending on the outcome of CFR’s capital raising exercise in Chile.

Source: Businessday