Ci­pla back to life

Finweek English Edition - - INVESTMENT - SHOKS MNISI MZOLO

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?

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