Sweet Consortium, which holds 18 per cent stake in Cipla Medpro, wants India’s Cipla Ltd to raise its offer price from the proposed Rs 10 per share for acquiring South Africa’s third-largest generic drug-maker, according to a media report.
“It is normal in deals of such a nature, particularly a 100 per cent buyout, to have a significant premium on the price at the announcement date,” Peter Moyo, representing the Sweet Sensation consortium, told the weekly Business Times.
JSE-listed Cipla Medpro is a South African affiliate of BSE-listed Cipla. The companies enjoy a long-standing business relationship spanning two decades.
“The 100 per cent deal was announced when the share was trading at about Rs 9.50,” Moyo was quoted as saying in the report.
On February 28, Cipla Ltd informed BSE that its Board of Directors have made a firm offer to the Medpro board to acquire 100 per cent of the ordinary shares of Medpro at a price of Rs 10 per share, and to settle all outstanding share options therein.
At Rs 10 a share, Cipla’s offer was 17 per cent more than the Rs 8.55 a share it had proposed in November 2012 for buying 51 per cent of Cipla Medpro.
The total consideration payable by Cipla would be approximately $ 512 million at Rs 10 a share. Cipla intends to delist Cipla Medpro from JSE on successful completion of the transaction.
Cipla had also said that its Rs 10 offer was at a 46.7 per cent premium on the value of Cipla Medpro’s share price in May 2012, when speculation around the takeover bid first started.
Moyo said there have been significant change since then, particularly the lucrative Rs 1.45 billion tender won by Cipla Medpro for the supply of anti-retroviral drugs to the South Africa Government.
“The BEE (black economic empowerment) shareholders would like to be part of the future and we will be having discussions with Cipla India to see how we can deal with this,” Moyo told the weekly.
The Board of Directors of Medpro have recommended to its shareholders to vote in favour of the offer, Cipla had said.
The Public Investment Corporation, which holds a 4.94 per cent BEE stake in Cipla Medpro, had earlier indicated that it was in favour of the buyout, the report said.
Sweet Sensation 67 (Pty) Limited (Sweet Sensation), the group of thirteen BEE consortiums that invested in Enaleni (now Cipla Medpro South Africa Limited) currently has an 18.4 per cent shareholding, Cipla Medpro South Africa website says.