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Adcock backs bid despite snub

The company’s largest shareholder the Public Investment Corporation is opposed to the deal.

The company’s largest shareholder the Public Investment Corporation is opposed to the deal. Picture: Stock.XCHNG.

JOHANNESBURG - The board of South Africa's No.2 drugs maker Adcock Ingram said it will talk with the state-owned pension fund to keep alive a $1.3 billion bid from Chile's CFR Pharmaceuticals, which the fund rejected.

Pretoria has a history of sinking cross-border deals, especially when foreign ownership is seen as a threat to plans to raise living standards among the black majority.

The Public Investment Corporation (PIC), which is the biggest shareholder in Adcock with around 14 percent, according to Thomson Reuters data, had been seen as a possible hurdle to the deal after saying it would prefer a local investor.

"A combination with CFR ... would be in the best interests of all Adcock Ingram shareholders," Adcock Chairman Khotso Mokhele said in a statement on Thursday in response to PIC's rejection of the CFR deal this week.

"There is a significant level of shareholder support for CFR's proposal and Adcock Ingram will continue to engage with the PIC regarding its position as well as the merits of the proposed transaction," he added.

CFR already has the support of shareholders with a 45 percent stake, although it needs 75 percent support.

Adcock supplies equipment to public hospitals and life-prolonging antiretrovirals drugs to HIV/AIDS patients.

"The PIC management and investment committee have come to the unanimous decision that it is not in the best interest of our shareholding to support the CFR offer in its current form," PIC Chief Executive Elias Masilela said in a statement.

CFR in September offered R12.6 billion in cash and shares to buy Adcock. Mokhele told a conference call at the time that talks with the government were going extremely well.

Adcock has been the target of other bids, including from local firm Bidvest. Adcock's board has said CFR's offer was the most attractive.

Last year, South Africa rejected a $385 million offer by South Korea's KT Corp for a stake in Telkom , saying the telecoms operator was at the heart of its ambitious broadband rollout plans.

Adock shares were steady at R68.50 by 1547 GMT, slightly outperforming the broader JSE All-share index.

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