Joffe targets Adcock to expand empire

The Bidvest head looks set to block a massive buyout deal by Chile’s CFR Pharmaceuticals.

Bidvest CEO Brian Joffe. Picture: Supplied.

JOHANNESBURG - Brian Joffe, the hard-driving entrepreneur whose empire spans shipping to mop sales, has a favourite saying: "Why go into business to test the waters? Go in to make waves."

The 66-year-old son of Lithuanian immigrants may do just that next month, when he is expected to block a $1.2 billion Chilean bid for Johannesburg-based drugmaker Adcock Ingram, in which his Bidvest Group owns a stake.

Santiago-based CFR Pharmaceuticals has offered R12.8 billion in cash and shares for Adcock, aiming to add Africa to existing operations in Latin America and Asia.

But Joffe - described by those who know him as a numbers-focused straight-talker - sees in Adcock his own chance to access new markets, and turn around another lagging firm.

Adcock supplies life-prolonging HIV/AIDS medicine through a government programme and is an important player in a plan to overhaul South African healthcare. But it has suffered from lacklustre sales and an over reliance on its home market, but could harness strong economies elsewhere in Africa with its wide range of over-the-counter medicines.

The tug-of-war is South Africa's biggest corporate spat in recent memory and has revived concerns that Pretoria is uneasy about foreign investment, especially takeovers that could impact the black majority.

Because the state pension fund is the largest shareholder in both Adcock and Bidvest, the standoff has also prompted talk Joffe is working with the government to thwart CFR, something he has denied.

CFR's founding Weinstein family accused the Public Investment Corporation (PIC) of protectionism, a charge echoed by Business Day.

The PIC says it doesn't want CFR shares, but rather wants to benefit directly from improvements at Adcock.


Joffe has established a pattern for overhauling the firms he acquires: Focus on cash flows, capital allocation and returns, and encourage each business to work with others he owns. Some group companies are cleaned by the cleaning unit and furnished by the furniture arm.

"One thing about Brian is that he's got the ability to grow big companies," said David Shapiro, a veteran stockbroker who grew up with Joffe.

He has turned a small, apartheid-era venture selling bakery ingredients into an empire totalling more than 300 businesses ranging from freight and auto sales to frozen food. Revenue is $15 billion and Bidvest employs nearly 140,000 people in its main markets of South Africa, Europe and Asia.

"He can overpay, but he gets more out of a business than the incumbent management. He's very good at making the business focused, and then managing finances and return numbers," said one of his business associates.

"He's a pretty demanding fellow."

Since 1990 Bidvest's share price has increased 142-fold - and Joffe has said it "outscores Jack Welch's GE and Warren Buffet's Berkshire Hathaway as a wealth creator".

Now, he believes, Adcock products could provide a further expansion opportunity in sub-Saharan Africa, where economic growth is expected at 6 percent this year - or as much as 8 percent in Mozambique and Zambia - fuelling consumer demand for everything from cosmetics to painkillers.

"From Joffe's perspective Adcock is a brilliant asset. It has excess capacity and it gives him the opportunity to move into Africa. He clearly believes it has been inefficiently run," said Roy Mutooni, an analyst at Renaissance Capital.

"He has an eye for undervalued assets and seems to know where the issues are in the acquisitions he's made."

Joffe first attempted to take over the drugmaker early last year but was rebuffed. After CFR stepped in he went direct to Adcock shareholders with a cash bid and now owns around seven percent - enough to block CFR when combined with the 22 percent held by the state pension fund.

CFR needs backing from investors with 75 percent of Adcock in a vote next month.


Yet Bidvest's record is not unblemished: in 2006 it sold its money-losing printing business Lithotech France for a loss of 26 million euro after failing to turn it around.

He also walked away from packaging firm Nampak in 2008 after it released a hefty profit warning. But subsequently the company revived and its shares trebled.

Joffe, who declined to be interviewed by Reuters, was candid about his setbacks in a 2009 magazine interview: "There was a time when the Joffe name might have commanded a premium - but that's gone now."

In a more recent interview with CNBC Africa, he appeared annoyed when asked about charges from CFR that his offer for Adcock would only benefit himself.

"That's a bit rich coming from them, seeing that they control about 52 percent of CFR and I've got about one percent of Bidvest," he said referring to the Weinsteins, who in fact own around 73 percent of their business.

A Johannesburg native, Joffe grew up in the city's close-knit community of Lithuanian Jews, inheriting an immigrant work ethic that helped shape other prominent South Africans such as central bank governor Gill Marcus and Glencore Xstrata CEO Ivan Glasenberg.

In his spare time, Joffe is an accomplished photographer, and has published a book of African wildlife photos accompanied by inspirational quotes - his own, alongside those of Napoleon and Thomas Edison. The emphasis on success and tenacity - "Building a business is like child's play, one block at a time" - suggests his battle for Adcock could go the distance.