Cipla Medpro wants Indian co to hike offer: Report

Sweet Consortium, which holds 18 per cent stake in Cipla Medpro, wants India's Cipla Ltd to sweeten its offer price from the proposed R10 per share for acquiring South Africa's third-largest generic drugmaker,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 R9.50," 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 percent of the ordinary shares of Medpro at a price of R10.00 per share, and to settle all outstanding share options therein.

At R10 a share, Cipla's offer was 17 percent more than the R8.55 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 USD 512 million at R10 a share. Cipla intends to delist Cipla Medpro from JSE on successful completion of the transaction.

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Cipla had also said that its R10 offer was at a 46.7 percent 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 R1.45 billion tender won by Cipla Medpro for the supply of anti-retroviral drugs to the South Africa government.

"The BEE 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 percent 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 (black economic empowerment) 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.