Shareholders to decide Cipla Medpro takeover on Wednesday

Cipla India's USD 510-million dollar offer to take over South Africa's third-largest drug maker Cipla Medpro goes on the floor for shareholders' voting on Wednesday, May 15, reports CNBC-TV18's Archana Shukla.

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There has been a fair amount of opposition to Cipla's offer to acquire or takeover South Africa-based Cipla Medpro. Initially, shareholders reported that the 10-rand per share offer which actually is a 17-percent sweetened offer by Cipla is not adequate and needs to be raised.
Share-holders also add that the offer does not represent the fair value of Cipla Medpro which recently won a 1.4-billion Rand supply contract from the South African government for antiretroviral drugs.
Share-holders seek the presentation of the 20 year supply contract inked between Cipla and Cipla Medpro in 2005 on concerns that if Cipla’s offer to takeover Cipla Medpro fails, Cipla will stop supplying drugs to Cipla Medpro.
Through the 20-year supply contract, Cipla is the largest supplier of drugs to Cipla Medpro.
Based on these concerns, analysts feel that the takeover process might not succeed. However, other analysts opine that the offer proves Cipla’s intent to invest in the manufacturing capabilities of Cipla Medpro and if Cipla’s offer fails Cipla Medpro’s share prices may drop which will not favour shareholders.
Cipla Medpro CEO Johan du Preez  said that the competitive rationale of not disclosing the contract outweighs the benefits of shareholders reviewing it. He also said that even if the offer fails, the status quo will maintain and company will keep getting supplies from Cipla India.
Cipla’s CEO Subhanu Saxena told CNBC-TV18 that if the offer fails, Cipla will look for other opportunities in the South African market.