New bid for Adcock Ingram

Chile's CFR Pharmaceuticals is planning a $1.3-billion bid for Adcock Ingram in a cash-and-share deal that would create a drugs company with exposure to fast-growing economies in four continents.

Under the non-binding offer, Santiago-based CFR would offer to buy Adcock's 175million shares at R73.51 each, valuing South Africa's second-biggest drugs maker at R12.86-billion.

The offer is nearly at a 14% premium to Adcock's closing price on Tuesday.

Shares in Adcock jumped 3% to R66.43, well below the offer price but outpacing its closest domestic rival, Aspen Pharmacare.

Adcock shares rose as high as R68.60 in morning trading, coming close to its 52-week high of R68.80 reached in May.

The CFR offer is about 4% below Adcock's "intrinsic value", according to Thomson Reuters StarMine, which pegged the company's share price at R76.50 based on its most likely earnings growth trajectory over the next five years.

Logistics group Bidvest also courted Adcock earlier this year.

In March, Bidvest CEO Brian Joffe sent a letter to Adcock CEO Jonathan Louw, saying he wanted to buy a 60% controlling stake of the company for R6.2-billion, Business Day reported.

Adcock at the time disputed the letter, saying it did not represent a firm offer, it was reported.

For Adcock, which has underperformed rivals both operationally and in stock market terms in recent years, the Chilean deal would give it a substantial presence in Latin America.

The deal would also open the doors for the Chilean company to tap into Africa's expanding markets, where Adcock sells over-the-counter drugs and antiretroviral treatments for HIV/Aids.

If the deal goes through, the combined company would have annual revenue of about $1.3-billion, with exposure to two billion patients in more than 23 countries.

CFR said it would seek a secondary listing on the JSE if the deal was implemented.