Bidvest is exercising its legal right to make an offer directly to Adcock Ingram shareholders after the 120-year-old company told it that its initial approach to the board was not a proper offer and was not legally competent. Bidvest in turn has dismissed Adcock’s response as legalistic and overly defensive.
Adcock Ingram has been at pains in all official communication to follow the letter of the law. It does not once refer to the Bidvest approach, sent by letter to management on the 21 March public holiday, and while CEO Jonathan Louw was on leave, as an offer. It variously describes it as a “proposal” or “letter” but never acknowledges that a firm offer was put on the table. Rather it said it had “fundamental legal and material prudential concerns with the Bidvest letter,” and said it did not constitute a firm intention to make an offer in terms of the Companies Act.
That assertion has left market commentators, who point to the considerable deal-making prowess of Bidvest under CEO Brian Joffe, perplexed. How could Joffe, who has built a career, reputation and a R76bn business in less than a quarter of a century based on his ability to cut a deal, not follow proper process? Bidvest disagrees with Adcock’s legal opinion on the validity of its offer and Joffe appears to be short on patience.
“All we want is for our offer to be put to Adcock Ingram shareholders,” said Joffe in a recent radio interview. The company’s apparent intransigence on this point, even though it has left the door open to a fresh approach from Bidvest and other suitors, means that Joffe is dispensing with the niceties. Nobody involved in the deal is calling it hostile – but it is certainly not friendly as Bidvest has stated its i ntention to go directly to shareholders.
This is by no means a done deal even though the share price ratcheted up strongly to over 6000c following the Bidvest expression of interest and has not dropped below that level since. But Joffe has walked away from deals before, as recently as March when a plan to acquire leather goods specialist Brandcorp from Ethos Private Equity f izzled out.
With Adcock however, he appears to have the bit between his teeth for this underperformer. Adcock, which carries the slogan: “Adding Value to Life” on its website has not done the same for its longsuffering shareholders. Our graph illustrates the substantial under performance of Adcock versus its 2009 acquisition target Cipla Medpro, itself now the subject of a takeover by Cipla India, and the rapidly globalised poster-boy of South African pharmaceutical i ndustr y Aspen Pharmacare.
“The reluctance of the Adcock Board to propose the Scheme is being rationalised and f r ustrated by i nsubstantial and irrelevant technical