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Adcock Ingram and CFR reach agreement regarding the proposed creation of a uniquely diversified emerging markets pharmaceuticals company

2013/09/11 00:00:00

Adcock Ingram and CFR reach agreement regarding the proposed creation of a uniquely diversified emerging markets pharmaceuticals company
Adcock Ingram and CFR have entered into a transaction implementation agreement regarding a potential cash and shares offer by CFR to acquire 100% of the issued ordinary share capital of Adcock Ingram

In a joint announcement released on the JSE News Service today, Adcock Ingram Holdings Limited (Adcock Ingram) and CFR Pharmaceuticals S.A. (CFR) of Chile said the companies had concluded a transaction implementation agreement, which could see CFR acquire 100% of the ordinary shares of Adcock Ingram in a deal worth R12.6 billlion (approximately US$1.3 billion). The combination of Adcock Ingram and CFR would create a substantial and uniquely diversified emerging markets multinational, targeting patients across Latin America, Africa, South East Asia and India. The emerging markets pharmaceutical leader would have combined revenues of approximately R12.1 billion (approximately US$1.3 billion) and an asset base of approximately R215 billion (approximately US$21.5 billion).

The proposed offer price of R73.51 per ordinary share represents a 31% premium to the unaffected Adcock Ingram share price of R56.20 on 20 March 2013. The proposed offer price is currently worth R75.92 per ordinary share based on the closing price of CFR shares on the Santiago Stock Exchange on 10 September 2013.

A minimum of 51% and maximum of 64.3% of the proposed offer price would be settled in cash and a minimum of 35.7% and maximum of 49% in new CFR shares. CFR plans to seek a secondary listing on the JSE in a first of its kind transaction in South Africa.

The potential offer would represent foreign direct investment for South Africa of more than R12.6 billion and, through the proposed secondary listing of CFR on the JSE, would enhance South Africa’s profile as an investment destination.

CFR and Adcock Ingram have completed reciprocal due diligence of each other’s businesses. The potential offer, however, remains subject to certain pre-conditions. Adcock Ingram’s Independent Board is of the view that the CFR proposal is the most favourable proposal received to date. Subject to the fulfilment of the pre-conditions and receipt of a favourable independent expert opinion, the Adcock Ingram Independent Board intends to recommend that its shareholders vote in favour of the proposed transaction.

Commenting on today’s announcement, Chairman of Adcock Ingram Dr Khotso Mokhele said: “We have reached a significant milestone for both the Independent Board’s process and our discussions with CFR, which are now far advanced. The CFR proposal remains the most favourable received to date and is evidence of our commitment to maximise value for our shareholders. It is superior in terms of proposed offer price, conditionality, strategic rationale, future value creation potential and execution risk. Importantly, it will ensure that South Africa remains core to the merged company thus delivering value not only to our shareholders, but also to our employees and South Africa at large. CFR also understands the importance and value of empowerment.”

Adcock Ingram would be a central part of the combined business, generating approximately 40% of group revenues. Synergies stand to be unlocked through complementary product portfolios, business structures, geographical presence and manufacturing footprints. The consolidated manufacturing footprints will drive efficiencies and cost reductions, while also generating further investment into Adcock’s factories. This is expected to have a positive effect on long-term employment and will drive exports from South Africa, in line with the South African government’s strategic objectives for the country, as well as CFR’s commitment to preserve and grow jobs within Adcock Ingram.

CFR’s CEO, Alejandro Weinstein added: “We have committed to growing Adcock’s business and plan to transfer a number products to Adcock’s South African and Indian factories, which would help drive job creation and exports. Together, our combined businesses are expected to generate significant revenue and cost synergies, with an estimated net present value of approximately R4.4 billion. We would be uniquely positioned to capitalise on attractive market opportunities in South America, Africa and South East Asia.”

CFR has concluded non-binding memoranda of understanding with Adcock Ingram’s BEE shareholders, comprising both strategic BEE shareholders and qualifying staff, to remain invested in the company. Participants in each of Adcock’s employee incentive schemes would also benefit from either the acceleration of their share options or an equitable offer from CFR.

In addition, CFR has signed a non-binding memorandum of understanding with Baxter, the multinational partner for Adcock Ingram’s hospital products division, to secure existing licensing, distribution and supply arrangements. Subject to final agreement, Baxter will irrevocably undertake to consent to the change in shareholding should the transaction be implemented.



Newswire Conference Call
Adcock Ingram and CFR will host a media conference call at 16h30 today
Dial in details:
+27 11 535 3600
0800 200 648
And ask to be put through to the Adcock Ingram conference call.

About CFR Pharmaceuticals
CFR is a multinational emerging markets pharmaceutical company. Similar to Adcock Ingram, CFR’s roots lie in a family business which was started in 1922 by Mr Nicolas Weinstein. 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 employs over 7000 people and has a market leading presence in Chile, Peru and Colombia. It also has operations in 12 other countries in Latin America and a growing presence in other emerging and niche markets including Canada, the United Kingdom and Vietnam.

It specialises in the development, production and commercialization of specialty-brand generic drugs, including products sold under prescription. In 2012, CFR generated revenues of US$757 million. It recently reported strong 2H earnings for FY2013 and has a current market capitalisation more than US$2 billion. For more information go to

About the Chilean Business Environment
Chile is widely accepted as an attractive business environment, as evidenced by the presence of many foreign multinational’s 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. According to UNCTAD.

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 (Source: Global Data)

About Adcock Ingram
Adcock Ingram is a leading South African pharmaceutical company. The company 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 in to 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. For more information go to

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; aore thank of