Cipla back to life
AFTER LURCHING from one corporate scandal to the next and controversial top-level departures, Cipla Medpro needed a bit of redemption. Scoring a lion’s share of the R5.9bn tender for HIV/Aids treatment in the public sector does just that. Not only did the maker of generic drugs outshine its larger rivals in this round of ARV Government tender – with its slice estimated at R1.4bn or more than double what it scored previously – but its win reaffirms it as key in this industry.
The Indian suitor, Cipla Ltd, couldn’t have come at a more promising time. The Mumbailisted giant is offering to take 51% of the local firm for 855c/share or R1.9bn. However, with the stock having picked up to around 870c (off an all-time high of 890c), the Indians might just have to consider sweetening the deal if Cipla Ltd is serious about getting investors on its side. A look at the earnings multiple implies the stock is, as things stand, fairly cheap. If that’s the case, why would investors be prepared to sell at an even lower price?