News Room


CFR Pharmaceuticals makes firm offer to acquire Adcock Ingram for R12.6bn

2013/11/15 00:00:00


CFR Pharmaceuticals makes firm offer to acquire Adcock Ingram for R12.6bn


Creating a unique emerging markets pharmaceuticals leader.

Landmark South-South transaction would represent almost 65% of the net annual FDI of $1.9bn that South Africa averaged between 1994 and 2012

In a joint announcement on the JSE’s SENS today, Adcock Ingram shareholders and the market were informed that the transaction implementation agreement between CFR Pharmaceuticals of Chile and Adcock Ingram has become effective. Showing confidence that it will secure the requisite shareholder support for the transaction, CFR is making a recommended cash and shares offer to acquire Adcock Ingram for R12,6 billion, in what would  be one of the most significant inbound investments into South Africa in recent years.

Of the R12,6 billion consideration payable, up to R8.1 billion will be injected into the country by way of a cash settlement, and the balance will be settled in CFR shares. The newly combined company will be listed on both the Santiago Stock Exchange and the JSE, thus enhancing South Africa’s reputation as a global investment destination. This will be the first time the South African Reserve Bank’s inward listing relaxation will have been used to effect a major cross-border transaction, and as such the CFR local listing will not impact shareholders’ foreign exchange allocation.

Indicating their support for this signature transaction, shareholders representing approximately 45% of the share capital of Adcock Ingram (excluding treasury shares) have pledged support for the transaction.  Visio Capital, Absa Asset Management, Stanlib Investment Management, Afena Capital, 36One Asset Management and Sanlam Asset Management are among the 29.3% of the shares eligible to vote at the general meetings that have irrevocably undertaken to vote in favour of the resolutions required to approve the scheme of arrangement. Prudential, the holder of another 7,5% of the shares eligible to vote at the general meetings has provided a letter of support.

Adcock Ingram’s BEE shareholders have entered into agreements with CFR to ensure that they remain shareholders in Adcock Ingram. In addition, CFR has secured the support of Adcock’s multinational partners – including Baxter Healthcare, which provides products to Adcock Ingram’s hospital division, and Medreich, Adcock Ingram’s joint venture partner in India – consenting to a change in control of Adcock.

Commenting on the announcement CFR Chief Executive Officer Alejandro Weinstein said:We are delighted to announce a firm and binding offer for Adcock Ingram.  Together, we have the opportunity to create a world-class, pan-emerging markets pharmaceuticals business delivering a long-term future and significant benefits for all South African stakeholders. Indeed, the compelling rationale for the proposed combination has been accepted by the overwhelming majority of all stakeholders we have engaged with and this is reflected in the outstanding level of shareholder support received to date.  We look forward to confirming that support at the General Meeting next month to approve the combination.

Dr Khotso Mokhele, Chairman of Adcock Ingram, said:In line with our fiduciary duties, the Adcock Ingram Board and Independent Board has overseen a rigorous, eight month process where we have thoroughly evaluated all the options before us to ensure we maximise value for shareholders and all other stakeholders. We are unanimous in our view that CFR remains the most compelling option on all counts - from the offer price, strategic rationale and ability to execute, through to the creation of  a unique emerging markets pharmaceuticals player. The combination with CFR makes an enormous amount of sense and we are pleased with the support we have received from a substantial number of our shareholders, including our BEE shareholders and key multinational partners. We appreciate the engagements with relevant senior South African government representatives, which have  been positive and constructive.

Mokhele added: This presents a ‘win win’ for all stakeholders. This signature transaction will not only benefit our shareholders, but also our employees and customers, and ultimately patients and South Africa at large. It will  support our national strategic objectives in areas such as skills transfer, exports and jobs. It would implement much of what the National Development Plan argues is required for South Africa’s successful future.

This landmark South-South transaction would represent approximately 65% of the net annual FDI of $1.9bn that South Africa averaged between 1994 and 2012, finally taking South Africa closer to the $5 billion-$10 billion that the Goldman Sachs’ recently published “Two Decades of Freedom” report recommends South Africa needs to fund its current account deficit.  Goldman Sachs’ analysis of South Africa’s successes and challenges has been endorsed by Cabinet as an affirmation of the priorities for the future as set out in the National Development Plan.
Adcock Ingram CEO Dr Jonathan Louw said:In the context of a rapidly consolidating global pharmaceutical market, the combination with CFR allows Adcock Ingram to achieve optimum value potential through access to high-growth markets, an expanded geographical and manufacturing footprint, and a complementary product portfolio. We will be ideally positioned to explore other attractive emerging markets and sector consolidation opportunities across Latin America, Africa, South East Asia and India.

The Adcock Ingram Independent Board appointed JPMorgan Chase Bank to act as independent expert to review the terms of the offer and provide a fair and reasonable opinion. JP Morgan has confirmed that, in its opinion, the terms and conditions of the offer are fair and reasonable.



Transaction details

  • A minimum of 51% and potentially up to a maximum of 64.3% of the R12,6bn total consideration will be settled in cash, with the remainder in new CFR shares. 
  • With CFR’s shareholders having authorised the capital increase process in a special general meeting in Chile on 22 July, it is expected that the final offer mix and the final ratio of cash to new CFR Shares will be finally determined and announced on or about February 2014.
  • The Scheme Consideration, based on the minimum cash amount and maximum number of New CFR Shares in terms of the Offer Mix, equates to:
  • ZAR73.51 based on the fixed attributed value of ZAR2.334 per CFR Share, which represents a premium of 31% to the closing price of Adcock Ingram ordinary shares of R56.20 on 20 March 2013
  • ZAR75.76 based on a value of ZAR2.48 per New CFR Share (calculated based on the ZAR equivalent closing price of CFR shares as at 14 November 2013 and ZAR/CLP exchange rate of ZAR50.35), which represents a premium of 35% to the Unaffected Share Price; and
  • ZAR77.02 based on a value of ZAR2.56 per New CFR Share (calculated based on the volume weighted average price of CFR shares for the 30 trading days up to and including 14 November 2013 and the daily ZAR/CLP exchange rate over the same period), a premium of 37% to the Unaffected Share Price.
  • The current combined value of the offer price and identified synergies is in excess of R80 per share.


Transaction rationale, synergies and benefits to SA

  • The combined business would be a substantial and uniquely diversified emerging markets pharmaceuticals group with a presence in more than 23 countries and employing more than 10,000 people.
  • Adcock Ingram is integral to the combined business and has an expected contribution of around 46% of combined group revenue, representing the largest contribution by country followed by Colombia and Chile with 18% and 12% respectively. The Adcock Ingram brand will be preserved and extended to markets beyond South Africa.
  • CFR will transfer the manufacturing of a significant number of its products to Adcock’s factories, from which it will drive exports into new markets in Latin America and South East Asia. This is expected to result in further investment in manufacturing and have a positive impact on skills, technology transfer, as well as jobs in South Africa.
  • The combination of Adcock and CFR is expected to unlock significant value through complementary product portfolios, business structures, geographical presence and manufacturing footprints.
  • CFR estimates total synergies of at least R4,5 billion (US$440 million)/ R6.30 per share will be achieved.
  • The combined business will be well positioned to explore other attractive emerging markets across Latin America, Africa, South East Asia and India.
  • CFR intends to roll out Adcock’s ARVs, over-the-counter and other products into the high-growth Latin American markets. While CFR will provide Adcock with access to new therapeutic areas such as oncology, anaesthesia and anti-infective hospital injectable products,  Adcock will help CFR grow its presence in the diabetes, dermatology and ophthalmic areas.  There will also be strong efficiencies by jointly sourcing active pharmaceutical ingredients.

About CFR Pharmaceuticals (

Similar to Adcock Ingram, CFR’s roots lie in a family business which was started in 1922. Today it is a well-respected business listed on the Santiago stock exchange and managed by the third generation of the Weinstein family.  Since 1990, under the leadership of current CEO, Mr. Alejandro Weinstein, CFR has successfully expanded beyond Chile into other countries in Latin America and other emerging markets.


Today, CFR has 14 manufacturing sites and has a market leading presence in Chile, Peru and Colombia. It also has operations in 12 other Latin American countries and a growing presence in other markets including Canada, the UK and Vietnam. 


CFR’s businesses are organised into three main areas:

  • Specialty Pharma, which specialises in chronic, semi-chronic and acute medications for sale in pharmacies under doctors’ prescription. CFR’s focus in these specialties is unique in Latin America, distinguishing it from other regional companies;

  • Complex Therapeutics: specialises in drugs for the treatment of complex illnesses, with a focus on state institutions, hospitals, private clinics and complex treatment centres; and

  • Health & Wellness: a line focused on over-the-counter products, nutrition, food supplements and homeopathic products.

In 2012, CFR generated revenues of US$757 million. Its market capitalisation exceeds US$2 billion.


About the Chilean Business Environment

Chile is widely accepted as an attractive business environment, as evidenced by the presence of many foreign multinationals regional offices in Santiago. Chile is ranked 20th, immediately behind the US, in the 2012 Transparency International Corruption Perceptions Index.


Chile’s sound regulation, combined with political and economic stability, has boosted foreign direct investment. This grew by 32% to more than US $30 billion in 2012, ranking Chile in the world’s top 10 in foreign capital inflows for the first time.


In the past 20 years, Chile has recorded an average annual per capita growth of 3.8 % and per capita income almost doubled in real terms. The World Bank predicts GDP growth of 4.7% in 2013. Gross National Income per capita is US$14,280 for 2012.


The pharmaceutical market in Chile and neighbouring Latin American countries is one of the fastest growing in the world, due to rapid population growth and increasing life expectancy. According to Global Data, the total market is expected to grow at a compound annual growth rate of more than 10% over the next seven years.


About Adcock Ingram (

Adcock Ingram provides an extensive portfolio of branded and generic medicines, is the market leader in over-the-counter brands, and is South Africa’s largest supplier of hospital and critical care products. Adcock Ingram has expanded its manufacturing and marketing expertise into the rest of Africa and India and continues to maintain its focus on the acquisition of businesses and brands in high-growth emerging markets.  African investments include Zimbabwe, Ghana and Kenya.


Media and Investor Presentation: 15h30

  • Adcock Ingram and CFR will host an investor and media presentation at 15h30 today, 15 November at the Il Paviglione room Michaelangelo Hotel Sandton, Johannesburg.

Media enquiries

For Adcock Ingram: Brunswick
Tel: +27 11 502 7300
Marina Bidoli:  +27 83 253 0478;
Carol Roos: +27 72 690 1230;

For CFR: College Hill
Amelia Soares: +27 82 654 9241;
Mark Garraway: +27 82 610 1226;