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Publish Date : 14-Sep-2013

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."

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