CMSA, formerly Enaleni Pharmaceuticals is one of South Africa's larger generic pharmaceutical companies which primarily markets and distributes a broad range of pharmaceutical products, including treatments for cardiovascular and respiratory diseases, diabetes, oncology, neuro-psychiatry and HIV/Aids.
CMSA is party to a long term supply arrangement with Cipla Limited of India in relation to the pharmaceutical products developed by Cipla India.
The acquisition is subject to fulfilment of regulatory and other suspensive conditions.
The offer of R4.75 per share represents a premium of 35.7% to Cipla's closing share price on 7 April 2009 and 34.9% to the 30-day volume weighted average price per Cipla share and 68.6% to the 90-day volume weighted average price per Cipla share calculated to that date.
The consideration will be settled in cash, with an option for shareholders to re-invest up to 25% of the offer consideration in the combined entity.
This allows Cipla shareholders to realise an attractive premium in cash, yet provides the opportunity to remain invested in, and benefit from the combined group, Adcock Ingram said.
Adcock's acquisition of Cipla will drive efficiencies to deliver cost synergies neither company could extract on a standalone basis through enabling critical mass and value chain consolidation, it said.
In addition, the transaction will deliver revenue synergies and greater access to products through improved marketing and distribution of Cipla's strong generics product pipeline; leveraging Adcock's strong sales, marketing, distribution and branding capabilities, particularly in the fast-moving consumer goods and hospital channels; and improved utilisation of Cipla India's world-class R&D and clinical capabilities, among others.
Commenting on the transaction, Adcock Ingram CEO Dr Jonathan Louw said: "The global and local pharmaceutical markets are changing rapidly. Both Adcock and Cipla will need to adapt to shifting sector dynamics in order to remain competitive. This transaction represents a unique opportunity to create a more diversified, complementary and strengthened portfolio of prescription, over-the-counter and hospital products, with an enhanced and more balanced exposure to target markets."
While not its preferred outcome, Adcock is reconciled to acquiring less than 100% of the issued ordinary share capital of Cipla, subject to a minimum shareholding of 51%.
Following the implementation of the transaction, assuming Adcock acquires the entire issued ordinary share capital of Cipla, the listing of Cipla on the JSE will be terminated.
Assuming Adcock acquires less than 100% of the issued ordinary share capital of Cipla, the Cipla shares will continue to be listed on the JSE and Cipla will become a subsidiary of Adcock Ingram.
Adcock would prefer to implement the transaction on an agreed basis through a Scheme of Arrangement in terms of the Companies Act, as Adcock will then acquire 100% of Cipla, will not be obliged to maintain the separate listing of Cipla, and will have greater flexibility in relation to the optimal deployment and configuration of the operations and assets of the combined group.
It will also be able to extract the maximum synergies and benefits resulting from the transaction. If, however, the transaction is not implemented by way of the Scheme, Adcock will implement the transaction by way of a "General Offer" to shareholders.
Louw continued: "This transaction will improve the strategic positioning of both companies by enabling the combined group to compete more effectively with local companies and multinationals in the South African pharmaceutical market. This will result in increased access to affordable medicines for South Africans. In addition, it will enable us to leverage Adcock's footprint and customer base in the rest of Africa with a broader and more complementary product offering, for the benefit of all stakeholders."
Source: Sowetan
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