ANT KATZ
 

Bidvest chief executive Brian Joffe told BUSINESS REPORT that what happened next at Adcock Ingram would depend on whether its directors invited Bidvest to join the board; and on the competition authorities’ response to the acquisition of a 34.5 percent stake in Adcock by a consortium of Bidvest and Community Investment Holdings, which has interests in the health-care sector – said today.

“We will be better placed to decide which way we’ll go next week,” Joffe said on Friday after the Adcock annual general meeting (AGM). He said he was not shocked by the trading statement released at the AGM, which revealed that earnings a share for the six months to March would be down by at least 20 percent.

Quite how Joffe pulled off the surreptitious coup
under CFR’s nose, faced with the clock
ticking, will soon be the stuff of boardroom legend

“We don’t know what’s included in the figures, they may include costs relating to the transaction. We bought the business for its potential, not for what it is.”

In: Bidvest set to push CFR aside in bid for Adcock published on Monday, Business Day reported that Adcock Ingram and Chile’s CFR Pharmaceuticals are to hold discussions on the way forward this week after industrial conglomerate Bidvest increased its stake in the South African drug manufacturer to 34.5 percent on Friday.

RIGHT: Joffe at Adcock
Ingram’s
AGM last Friday

The increased stake enables Bidvest to single-handedly block the proposed R12.8-bil merger of the drug companies. Adcock’s scheme meetings, set to take place this month could be called off and the deal officially abandoned.

CFR had offered R74.50 per Adcock share in a stock-and-cash deal that would have left the latter’s investors with about 17 percent of the combined entity.

Bidvest and empowerment group Community Investment Holdings (CIH) acquired most of 38-million Adcock shares traded on Thursday. The shares are believed to have been dumped by institutional shareholders Foord Asset Management and 36One Asset Management. 

Brian’s tactical acumen

The Sunday Times reported yesterday that “In a dramatic 48 hours last week, Bidvest CEO Brian Joffe vaulted from rank outsider to frontrunner in the ten-month long battle with the Chileans for South Africa’s second-largest pharmaceutical group, Adcock Ingram.

 “If anyone had doubted Mr Joffe’s tactical acumen, the past few days would have firmly dispelled that notion,” wrote the Sunday Times.

Joffe first launched the under-performing Adcock Ingram into play last March, putting in an unsolicited bid for the company at around R62 per share — an offer it since upped to R70 per share.

Adcock’s management, led by CEO Jonathan Louw, however, rejected Mr Joffe’s overtures and supported a bid by Chile’s CFR instead, citing CFR’s strong pipeline of products and potential for cross-selling overseas.

But critics said that another key reason for Adcock supporting CFR was that the Chileans would guarantee Mr Louw’s job whereas Mr Joffe wouldn’t necessarily.

Late on Thursday, it emerged that Mr Joffe had spent the better part of the day buying up nearly a quarter of Adcock Ingram, ahead of Friday’s AGM. By the end of Friday, Mr Joffe had roared back into the fray, and held 34.5% of the company, which makes pharmaceuticals such as Panado, Myprodol and Bioplus.

RELATED READS ON SAJR.co.za

29 October 2013 – Brian promises orderly exit from Bidvest CE assured the public that he was committed to the group for at least the next two to three years after spooking the JSE which was sparked by his comments about “succession” in the company’s annual report.

  1 December 2013 – Howzit, my Cousin, now let’s talk tachlis Santiago-based CFR’s CE Alejandro Weinstein challenged Joffe to a “debate between cousins.” The “cousin” statement could have referred to the fact that both men are Jewish, or that Joffe’s mother was a Weinstein.

At Adcock’s AGM, Joffe sat in the second row of the auditorium, and comfortably fielded questions from the media afterwards, the clear power broker at the meeting. By contrast, Mr Louw sat in the cheap seats at the back, apparently eager not to draw attention to himself.

“The fight is, to all intents and purposes, over,” said Mr Joffe triumphantly after the meeting.

CFR’s offer worth R74.50 per share, is set to collapse as it won’t secure the support of 75 percent of Adcock’s shareholders.

It was always touch-and-go anyway after the Public Investment Corporation (PIC), which held 22 percent of Adcock, had rejected the Chileans’ bid.

LEFT: Weinstein and Joffe certainly display similar characteristics

The PIC eventually explained this was because more value could be extracted by management changes. With CFR out the picture, the pressure is firmly on Louw’s management team.

Stuff

of

legend

Quite how Brian Joffe pulled off the surreptitious coup under CFR’s nose, faced with the clock ticking, will soon be the stuff of boardroom legend.

Bidvest’s offer of R70 a share was due to expire on Tuesday, so Foord Asset Management, which held 15 percent of Adcock, decided to sell out.

On Friday, 36One followed suit. This was a remarkable reversal, considering that Foord and 36One had initially supported CFR’s bid.

 RIGHT: A poignant-looking Joffe with
senior legal councel David Unterhalter
at Adcock’s AGM in Midrand last Friday

Bidvest’s purchase of nearly 40-million shares for R2.9bn on Thursday resulted in the highest volume trade in a day since Adcock listed in 2008.

It also meant nearly a quarter of Adcock’s entire shares changed hands on that one day.

At Adcock’s AGM in Midrand on Friday afternoon, Mr Joffe was relaxed in an open-neck shirt even though the tension was palpable in the auditorium.

Ultimately, the only blood on the floor was that of Andrew Thompson, a hard-working director and head of Adcock’s audit committee, who was voted out of office by shareholders.

Adcock chairman Khotso Mokhele says that the board believed it had the proper management team in place. Whether Brian Joffe agrees will become clear in the next few weeks.

CFR are now left in a bind: if they walk away, they will have to pay a R50-mil break fee.

Post-coup questions

Asked afterwards if he planned to take control of Adcock, Joffe said diplomatically: “I don’t know what control is … we would like at some point to play some strategic role in the future of Adcock. A lot depends on competition issues … it’s a bit uncertain at the moment but I expect that over the next week or so the position will become more clear.”

He said the company was in need of some tender loving care and that Bidvest would engage with management and try to rebuild bridges.

Pundits, however, believe that some of the directors who crossed Joffe’s path may soon have to make new plans. “Wait until he gets inside that box,” said an insider. “The fundamental mistake is that [CFR] took too long … the reason they couldn’t close it out is they didn’t have the money. If they’d come with cash …”

With a new influential shareholder taking the reins, some board members and executives may leave voluntarily, unless they buy into Brian’s vision.