Wrap Text
Joint announcement of a firm intention by CFR to make an offer to acquire 100% of the issued share capital of Adcock
Adcock Ingram Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 2007/016236/06
Share code: AIP
ISIN: ZAE000123436
(“Adcock Ingram” or “the Company”)
CFR Pharmaceuticals S.A.
(Incorporated in the Republic of Chile)
Chilean Tax ID: 76,116,242-K
Securities Regulation Registry number: 1067
Share code: CFR
ISIN: CL0001762831
(“CFR”)
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF APPLICABLE LAW OR REGULATION
JOINT ANNOUNCEMENT OF A FIRM INTENTION BY CFR TO MAKE AN OFFER TO
ACQUIRE 100% OF THE ISSUED SHARE CAPITAL OF ADCOCK INGRAM, OTHER THAN
THE ISSUED A AND B ORDINARY SHARE CAPITAL OF ADCOCK INGRAM AND ANY
ORDINARY SHARES HELD BY SUBSIDIARIES OF THE COMPANY, BY WAY OF A SCHEME
OF ARRANGEMENT, AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. SALIENT FEATURES*
* The boards of directors of Adcock Ingram and CFR are pleased to
announce the terms and conditions of a recommended cash and shares
offer to be made by CFR to Adcock Ingram shareholders (other than the
holders of the Bophelo Shares and the Treasury Shares) by way of a
scheme of arrangement:
o total Scheme Consideration of approximately ZAR12.6 billion
(approximately US$1.2 billion)
o a minimum of 51.0% (potentially increasing up to a maximum of
64.3%) of the total Scheme Consideration will be settled in cash
o a maximum of 49.0% (potentially reducing down to a minimum of
35.7%) of the total Scheme Consideration will be settled in New CFR
Shares
o final Offer Mix of cash and New CFR Shares will be announced post
completion of the CFR Capital Increase
o Adcock Ingram shareholders will also be offered a mix-and-match
facility
o if the Scheme is implemented, Adcock Ingram will be delisted from
the JSE and CFR will be listed on the JSE by way of a secondary
listing, which will be classified as an inward listing with
domestic status
* The Scheme Consideration per Scheme Share, based on the minimum cash
(51.0%) and maximum number of New CFR Shares (49.0%), equates to:
o ZAR73.51 based on the fixed attributed value of ZAR2.334 per New
CFR Share, a premium of 31% to the Unaffected Share Price
o ZAR75.76 based on a value of ZAR2.48 per New CFR Share (the ZAR
equivalent closing price of CFR shares on 14 November 2013), a premium
of 35% to the Unaffected Share Price
o ZAR77.02 based on a value of ZAR2.56 per New CFR Share (the ZAR
equivalent 30 day VWAP of CFR shares on 14 November 2013), a premium
of 37% to the Unaffected Share Price
* Adcock Ingram shareholders attention is drawn to the following
important matters:
o the Adcock Ingram Board has conducted a rigorous and extensive
seven month process, which has included the evaluation of all
interests expressed in the Company, and is of the view that the
Offer is the most compelling opportunity for Adcock Ingram
shareholders to realise value
o the combination would create a substantial and uniquely diversified
emerging markets pharmaceuticals group with an asset base of
approximately US$2.1 billion
o Adcock Ingram shareholders are being offered an attractive
valuation for their Scheme Shares. The Scheme Consideration per
Scheme Share currently equates to ZAR75.76, a 35% premium to the
Unaffected Share Price
o Adcock Ingram shareholders will gain exposure to an enlarged
multinational in CFR and should benefit from the combined group’s
increased scale, expanded geographical and manufacturing footprint,
complementary product portfolio and attractive positioning for
growth
o the Scheme Consideration per Scheme Share excludes CFR’s estimated
synergies arising from the combination of at least US$440 million
(approximately ZAR4.5 billion), which equates to approximately
ZAR6.3 per Scheme Share
o CFR has importantly completed due diligence and the Scheme
Consideration is not subject to any performance based adjustments
o CFR has reached agreements with Baxter, Medreich and the holders of
the Bophelo Shares and is ready to proceed with the Offer
o implementation of the Scheme is subject only to Adcock Ingram
shareholder approval and relevant regulatory approvals in various
jurisdictions
* Adcock Ingram and CFR note specifically the following benefits for
South Africa:
o significant foreign direct investment (potentially up to ZAR8.1
billion in cash and at least ZAR4.5 billion in New CFR Shares) and
a first of its kind cross-border transaction between Chile and
South Africa
o CFR plans to move production to South Africa resulting in
additional investment in manufacturing in South Africa and a
positive effect on South African exports
o creation of new jobs in Adcock Ingram and no retrenchments arising
from the implementation of the Transaction
o first time South Africa’s inward listing relaxation will be used to
effect a major cross-border transaction
o major new listing of an emerging markets multinational on the JSE
* The Adcock Ingram Board appointed JPMorgan Chase Bank, N.A.
(Johannesburg Branch) (“J.P. Morgan”) as independent expert to
consider the terms of the Offer and provide a fair and reasonable
opinion as required under section 114(3) of the Companies Act and
Regulation 90 of the Takeover Regulations. Having reviewed the terms
of the Offer, J.P. Morgan has indicated that in its opinion the terms
of the Offer are fair and reasonable
* The Adcock Ingram Board has accordingly resolved to support the
Scheme and intends to propose the Scheme and to recommend that Adcock
Ingram Ordinary Shareholders vote in favour of the Scheme
* The cautionary announcement published on 11 September 2013 and
renewed on 30 October 2013 is hereby withdrawn and caution is no
longer required to be exercised by Adcock Ingram shareholders when
dealing in the Company’s securities
* Capitalised terms used in this section have the same meaning as
ascribed in the body of this announcement
2. INTRODUCTION
Shareholders of Adcock Ingram and CFR are referred to the
announcements released by the Company on the Stock Exchange News
Service (“SENS”) of the JSE Limited (“the JSE”) on 3 July 2013, 15
August 2013, 11 September 2013 and 30 October 2013 regarding a
potential cash and shares offer (“the Offer”) by CFR to acquire 100%
of the issued share capital of Adcock Ingram, other than the issued A
and B ordinary share capital of Adcock Ingram (collectively “the
Bophelo Shares”) and any ordinary shares in Adcock Ingram held by
subsidiaries of the Company (“the Treasury Shares”). The Adcock Ingram
ordinary shares that will be the subject of the Scheme (defined below)
are hereinafter referred to as “the Scheme Shares”.
On 11 September 2013, the boards of directors of Adcock Ingram and CFR
(collectively “the Boards”) announced that Adcock Ingram and CFR had
concluded a transaction implementation agreement (“TIA”) setting out,
inter alia, the basis on which CFR would, subject to the fulfilment of
certain pre-conditions, extend the Offer to the holders of Scheme
Shares (“the Adcock Ingram Ordinary Shareholders”) and the basis on
which the board of directors of Adcock Ingram (“the Adcock Ingram
Board”) would agree to recommend the Offer and propose a scheme of
arrangement in terms of section 114 of the Companies Act 71 of 2008
(the “Companies Act”) between the Company and Adcock Ingram Ordinary
Shareholders (“the Scheme”). The Scheme, in conjunction with certain
arrangements related to the Offer, including those with holders of the
Bophelo Shares and in relation to the participants in the Company’s
employee incentive schemes, is hereinafter referred to as “the
Transaction”.
Shareholders of Adcock Ingram and CFR are hereby advised that the pre-
conditions to the TIA have been waived or fulfilled and therefore the
TIA is now effective. Having become effective, the TIA constitutes
notification by CFR to the Adcock Ingram Board of a firm intention to
make an offer, as contemplated in Chapter 5 of the Companies
Regulations, 2011 (“Takeover Regulations”).
Accordingly, the Boards are pleased to announce:
(i) CFR’s firm intention to make the Offer;
(ii) the Adcock Ingram Board’s agreement to propose and recommend the
Scheme;
(iii) certain arrangements with the participants in the Company’s
employee incentive schemes; and
(iv) if the Scheme is implemented, the listing of the entire issued
share capital of CFR on the securities exchange operated by the
JSE by way of a secondary listing, that will be classified as an
inward listing with domestic status for South African exchange
control purposes.
Adcock Ingram shareholders are advised that this announcement
constitutes a firm intention announcement as contemplated in
Regulation 101 of the Takeover Regulations.
3. SCHEME CONSIDERATION
The total consideration payable by CFR to the holders of the Scheme
Shares in terms of the Scheme (the “Scheme Consideration”) of
approximately ZAR12.6 billion (approximately US$1.2 billion) will be
settled partly in cash in South African Rand and partly in New CFR
shares (defined in paragraph 4.2) to be issued by CFR pursuant to the
CFR Capital Increase (defined in paragraph 4 below) (“Offer Mix”) as
follows:
* a minimum of 51.0% (being approximately ZAR6.4 billion) and
potentially up to a maximum of 64.3% (being approximately ZAR8.1
billion) of the total Scheme Consideration will be settled in cash in
South African Rand (equating on an aggregate basis to a minimum of
ZAR37.49 and up to a maximum of ZAR47.29 per Scheme Share to be
acquired) (“the Cash Consideration”); and
* a maximum of 49.0% (being approximately 2.6 billion New CFR Shares)
potentially reducing to a minimum of 35.7% (being approximately 1.9
billion New CFR Shares) of the total Scheme Consideration will be
settled in New CFR Shares (equating on an aggregate basis to a
minimum of 11.24 and up to a maximum of 15.43 New CFR Shares per
Scheme Share based on the fixed attributed value for the purposes of
the Offer of ZAR2.334 per New CFR Share) (“the Share Consideration”);
* The final Offer Mix and the final ratio of cash to New CFR Shares
(the “Relevant Ratio”) will be finally determined and announced on
SENS on completion of the CFR Capital Increase.
3.1. Cash Consideration
The Cash Consideration will be funded by CFR from a combination of
cash-on-hand, external borrowings raised from a group of
international financing banks and, depending on the outcome of the
CFR Capital Increase, also from the proceeds of the CFR Capital
Increase.
3.2. Share Consideration
The issue of the New CFR Shares for the purposes of both the CFR
Capital Increase and the settlement of the Share Consideration has
been approved by CFR shareholders.
The Share Consideration will be registered in certificated form in
the name of PLC Nominees (Proprietary) Limited (“PLC Nominees”), an
entity operated by STRATE Limited (“STRATE”). PLC Nominees is an
established designated nominee company holding the aggregate of
South African client holdings in issuers such as Anglo American
plc, SAB Miller plc and Old Mutual plc, amongst others. Adcock
Ingram Ordinary Shareholders will have their beneficial interests
in the Share Consideration recorded and settled through the STRATE
system.
3.3. Offer Mix
The determination of the final Offer Mix is dependent on the
outcome of the CFR Capital Increase.
To the extent that CFR Minority Shareholders (defined in paragraph
4.2 below) elect to subscribe for New CFR Shares pursuant to the
CFR Capital Increase (or assign their pre-emptive rights to a third
party who ultimately subscribes for the New CFR Shares), CFR will
receive cash, thereby reducing the number of New CFR Shares
available to settle the Share Consideration (subject to a minimum
of 35.7%, being approximately 1.9 billion New CFR Shares of the
total Scheme Consideration being settled in New CFR Shares at all
times) and increasing the aggregate amount of the Cash
Consideration (subject to a maximum of 64.3%, being approximately
ZAR8.1 billion of the total Scheme Consideration being settled in
cash at all times). The CFR Controlling Shareholders (defined in
paragraph 4.2 below) have undertaken not to exercise their pre-
emptive rights in respect of entitlements to approximately 1.9
billion New CFR Shares to be issued as part of the CFR Capital
Increase. Those New CFR Shares in respect of which the CFR
Controlling Shareholders undertake not to exercise their pre-
emptive rights will be made available to settle the Share
Consideration.
Unless CFR resolves otherwise, CFR will initiate the Pre-emptive
Rights Offer only once Adcock Ingram Ordinary Shareholders have
approved the Scheme and the conditions precedent in 13.1 have been
fulfilled or waived. It is anticipated that the final Offer Mix and
Relevant Ratio will be finally determined and announced on SENS
during February 2014.
3.4. Mix-and-match facility
Adcock Ingram Ordinary Shareholders will be offered a mix-and-match
facility whereby they may elect, prior to settlement, to receive
for each Scheme Share that they own, their portion of the total
Scheme Consideration either in cash at an offer price of ZAR73.51
per Scheme Share or in New CFR Shares in the ratio of approximately
31.5 New CFR Shares per Scheme Share, or a combination of cash and
New CFR Shares.
While some Adcock Ingram Ordinary Shareholders may opt for more New
CFR Shares, others may opt for more cash. The aggregate amount of
cash and the aggregate number of New CFR Shares which will become
available to Adcock Ingram Ordinary Shareholders will not change.
Accordingly, the elections made by Adcock Ingram Ordinary
Shareholders through the mix-and-match facility will, where
necessary, be adjusted on a pro rata basis based on the aggregate
amount of cash and New CFR Shares which become available pursuant
to the implementation of the CFR Capital Increase, such that the
total Scheme Consideration will always reflect the Relevant Ratio.
To the extent that Adcock Ingram Ordinary Shareholders do not make
any election, they will be deemed to have elected to receive their
Scheme Consideration in the Relevant Ratio. No Adcock Ingram
Ordinary Shareholder will receive preferential treatment pursuant
to the mix-and-match facility.
3.5. Dividend protection
Adcock Ingram is precluded from declaring and paying dividends or
effecting any acquisition of its own shares at any time prior to
the implementation of the Scheme without the consent of CFR.
CFR is precluded from declaring and paying dividends or effecting
any acquisition of its own shares at any time prior to the
implementation of the Scheme without the consent of Adcock Ingram,
save for the declaration and payment by CFR of dividends not to
exceed 50% of CFR’s net profits for fiscal year 2013 (including,
but not limited to, the interim dividend that may be declared in
respect of the first nine months ending September 2013).
4. THE CFR CAPITAL INCREASE
The matters referred to in paragraph 4.1 below together with the Pre-
emptive Rights Offer (defined in paragraph 4.2 below) are together
referred to herein as “the CFR Capital Increase”.
4.1. Creation of New CFR Shares
At a special shareholders’ meeting held on 22 July 2013, CFR
shareholders approved, among other things, the creation of 3.0
billion New CFR Shares. This increase in CFR’s authorised share
capital is currently in the process of registration and approval
with the Superintendencia de Valores y Seguros (“SVS”), the Chilean
government agency responsible for supervising the activities and
entities participating in the securities and insurance markets in
Chile.
On 21 October 2013, CFR held another special shareholders’ meeting
for the purpose of passing resolutions to:
* authorise the New CFR Shares created pursuant to the CFR
Capital Increase to be settled in cash, or in kind through the
contribution of the Scheme Shares to CFR; and
* approving an expert’s opinion, required by the Chilean
Corporations Law and prepared by IM Trust Asesorias Financieras
S.A, regarding the valuation of the Scheme Shares.
These resolutions authorise, in terms of Chilean Law, the delivery
of the Scheme Shares as payment in kind for the subscription for
New CFR Shares to be issued by CFR in terms of the Scheme. Both
resolutions were passed and are currently in the process of
registration and approval with the SVS.
4.2. Pre-emptive Rights Offer
In terms of Chilean Law, if CFR proposes to issue and place new
shares pursuant to a capital increase, existing shareholders of
CFR must first be offered the right to subscribe for such new
shares pro rata to their shareholding before any other person who
is not a shareholder of CFR may do so. CFR will make a pre-emptive
rights offer to its shareholders (“Pre-emptive Rights Offer”) to
subscribe for approximately 2.6 billion new CFR Shares (the “New
CFR Shares”). Unless CFR resolves otherwise, this offer will be
made after the passing of all resolutions required to approve the
Scheme. Once initiated, the Pre-emptive Rights Offer will take
approximately 35 days to conclude.
CFR minority shareholders or their assigns (“CFR Minority
Shareholders”), currently owning approximately 27% of the issued
share capital of CFR, may accept the Pre-emptive Rights Offer. To
the extent that CFR Minority Shareholders accept the Pre-emptive
Rights Offer, the number of New CFR Shares available to discharge
the Share Consideration will reduce and the amount of the Cash
Consideration will increase on the basis set out in paragraph 3.3
above.
CFR’s controlling shareholders who currently own approximately 73%
of the issued share capital of CFR (“CFR Controlling
Shareholders”), have undertaken, subject to certain terms and
conditions, not to exercise their rights in terms of the Pre-
emptive Rights Offer. Accordingly, those New CFR Shares that the
CFR Controlling Shareholders would have been entitled to subscribe
for in terms of the Pre-emptive Rights Offer (being approximately
1.9 billion New CFR Shares) will be made available by CFR to
discharge a portion of the Share Consideration. As a consequence
of not exercising their pre-emptive rights in terms of the Pre-
emptive Rights Offer, the CFR Controlling Shareholders will own no
more than approximately 55% of the issued share capital of CFR
after implementation of the Scheme.
CFR has undertaken that, following the completion of the Pre-
emptive Rights Offer, it will transfer a cash amount equal to the
number of New CFR Shares subscribed for by CFR Minority
Shareholders multiplied by ZAR2.334 (“the Capital Increase
Amount”) into a designated escrow account with Citibank, N.A.,
London Branch, (“Citibank London”). The Capital Increase Amount
will, in turn, be converted into ZAR and credited to a ZAR-
denominated escrow account with Citibank N.A., South Africa Branch
(“Citibank South Africa”) prior to the finalisation date of the
Scheme for the purposes of discharging part of the Cash
Consideration on the date of implementation of the Scheme.
5. ADDITIONAL CAPITAL INCREASE
As stated, CFR has authority to issue up to 3.0 billion New CFR Shares
pursuant to the CFR Capital Increase. CFR shall be entitled at any
time after the expiry of the Pre-emptive Rights Offer period to make
another pre-emptive offer (“Small Pre-emptive Offer”) to its
shareholders of up to approximately 350 million New CFR Shares (being
the difference between the 3.0 billion CFR shares created in terms of
the CFR Capital Increase and the approximately 2.6 billion CFR shares
to be offered in terms of the Pre-emptive Rights Offer).
Any CFR shares issued pursuant to the Small Pre-emptive Offer will not
be offered at a price per CFR share which is less than the Chilean
Pesos (“CLP”) equivalent of R2.334. If CFR undertakes the Small Pre-
emptive Offer, CFR’s South African shareholders must hold at least 15%
of CFR’s issued shares following completion of the Small Pre-emptive
Offer.
6. BACKGROUND INFORMATION ON CFR
CFR is a multinational, emerging markets pharmaceuticals company head-
quartered in Chile with a market capitalisation of approximately
US$2.2 billion (approximately ZAR23.0 billion). CFR has significant
operations in Chile, Peru and Colombia, as well as a presence in
Venezuela, Argentina, Bolivia, Paraguay, Ecuador, Costa Rica, Panama,
El Salvador, Nicaragua, Honduras, Guatemala, the Dominican Republic,
Canada, the United Kingdom and Vietnam. CFR has 14 manufacturing
facilities in Chile, Argentina, Peru, Colombia and Canada and employs
over 7,000 people including a sales force comprising nearly 2,000
personnel.
CFR achieved a compound annual revenue growth rate of 22% for the
period 2009 to 2012.
6.1. History
In September 2010, CFR Chile S.A. and CFR International SpA, the
entities that respectively hold CFR’s Chilean and international
operations, were reorganised to form CFR, with the resulting effect
that CFR Chile S.A. and CFR International SpA became wholly owned
subsidiaries of CFR. In 2011, CFR completed its initial public
offering on the Santiago Stock Exchange, which offering was more
than 10 times oversubscribed, raising US$370 million (approximately
ZAR3.8 billion at current exchange rates) and, as a result, CFR
became the only publically traded pan-Latin American
pharmaceuticals company.
In 2012, CFR acquired stakes in Domesco in Vietnam and Uman Pharma
in Canada, and 100% of Laboratorio Franco Colombiano Lafrancol
S.A.S. (“Lafrancol”) in Colombia. As a result of the acquisition of
Lafrancol, CFR became the largest pharmaceuticals company in
Colombia.
CFR continues to invest in the launch of new divisions as part of
its strategy to exploit multiple sources of growth. During 2012,
CFR’s focus on innovation resulted in 215 new products and product-
line extensions being launched.
The Weinstein family currently controls approximately 73% of the
issued share capital of CFR indirectly via three separate holding
companies. Mr Alejandro Weinstein, the current Chief Executive
Officer (“CEO”) of CFR, has 30 years of pharmaceutical experience.
Mr. Weinstein has successfully led CFR’s transformation from a
Chilean-focused pharmaceuticals company to a pan-emerging markets
pharmaceuticals corporation.
6.2. CFR’s business divisions
CFR’s businesses are organised into three main areas:
* Specialty Pharma: specialises in chronic, semi-chronic and
acute medications for sale in pharmacies under doctors’
prescription. CFR’s focus in these specialties is unique in
Latin America, distinguishing it from other regional companies;
* Complex Therapeutics: specialises in drugs for the treatment
of complex illnesses, with a focus on state institutions,
hospitals, private clinics and complex treatment centres; and
* Health & Wellness: a line focused on over-the-counter
products, nutrition, food supplements and homeopathic products.
7. RATIONALE FOR THE TRANSACTION
7.1. Adcock Ingram’s existing strategic position
Since unbundling from Tiger Brands Limited in 2008, Adcock Ingram's
initial priority was the modernisation and capacity increases at
its factories and distribution facilities. Once this was well
advanced, Adcock Ingram began to seek growth opportunities beyond
its South African base. This resulted in expansion into sub-Saharan
Africa from 2009 to 2010 and, early in 2013, in India.
Over this period, Adcock Ingram also explored some larger
opportunities to grow its business beyond these geographies, driven
by the need to access additional products for its pipeline, achieve
operational synergies and diversify its revenue base.
It has become increasingly clear to the Adcock Ingram Board that a
combination or alliance with an international pharmaceuticals
player represents the logical means to unlock Adcock Ingram’s full
potential and thus optimum valuation.
It is against this background, inter alia, that the Adcock Ingram
Board has contemplated expressions of interest from CFR and from
other parties. As it has transpired, the proposal from CFR combines
both attractive valuation parameters for Adcock Ingram shareholders
and substantial potential synergies from combining the businesses
of Adcock Ingram and CFR, as outlined in paragraph 7.6 below.
In considering the Offer, Adcock Ingram Ordinary Shareholders
should carefully consider the benefits of a combination of CFR and
Adcock Ingram against the default position in the event that the
Scheme is not implemented.
7.2. Strategic rationale for the Transaction
The combination of Adcock Ingram and CFR would:
* create a substantial and uniquely diversified emerging
markets pharmaceuticals group with a presence in more than 23
countries and employing more than 10,000 people;
* generate revenues of approximately US$1.1 billion
(approximately ZAR10.5 billion), based on the pro forma
performance of Adcock Ingram and CFR for the 12-month period
ended 31 March 2013 and translated at a ZAR/US$ exchange rate
of ZAR9.17:US$1 as at 29 March 2013;
* have an asset base of approximately US$2.1 billion
(approximately ZAR19.5 billion) based on the consolidated net
asset values of Adcock Ingram and CFR as at 31 March 2013 and
translated at a ZAR/US$ exchange rate of ZAR9.17:US$1 as at 29
March 2013;
* benefit from access to high-growth markets, an expanded
geographical and manufacturing footprint and a complementary
product portfolio;
* be well positioned to explore other attractive emerging
markets and sector consolidation opportunities across Latin
America, Africa, South East Asia and India; and
* have the potential to generate substantial revenue and cost
synergies over time.
7.3. Attractive valuation with significant cash component
The Scheme Consideration, based on the minimum cash amount and
maximum number of New CFR Shares in terms of the Offer Mix, equates
to:
* ZAR73.51 based on the fixed attributed value of ZAR2.334 per
CFR Share, which represents a premium of 31% to the closing
price of Adcock Ingram ordinary shares of R56.20 on 20 March
2013, (“Unaffected Share Price”);
* ZAR75.76 based on a value of ZAR2.48 per New CFR Share
(calculated based on the ZAR equivalent closing price of CFR
shares as at 14 November 2013 and ZAR/CLP exchange rate of
ZAR50.35), which represents a premium of 35% to the Unaffected
Share Price; and
* ZAR77.02 based on a value of ZAR2.56 per New CFR Share
(calculated based on the volume weighted average price (“VWAP”)
of CFR shares for the 30 trading days up to and including 14
November 2013 and the daily ZAR/CLP exchange rate over the same
period), a premium of 37% to the Unaffected Share Price.
Subject to the mix-and-match facility described in paragraph 3.4
above, Adcock Ingram Ordinary Shareholders will receive a minimum
of 51.0% and up to a maximum of 64.3% of the Scheme Consideration
in cash.
7.4. Benefits for South Africa
The combination of Adcock Ingram and CFR is expected to yield the
following benefits for South Africa:
* Significant foreign direct investment: The Transaction
represents a significant foreign direct investment into South
Africa of approximately ZAR12.6 billion, of which a minimum of
ZAR6.4 billion and up to a maximum of ZAR8.1 billion will be in
cash. The proposed inward listing of CFR on the JSE is also
likely to enhance South Africa’s profile as an investment
destination;
* Investment in manufacturing and security of supply: Adcock
Ingram’s current manufacturing facilities will play an
important role in the combined group. By CFR moving certain of
its production to South Africa, the combination should give
rise to additional investment in manufacturing in South Africa
with a resultant positive effect on exports for South Africa.
In addition, CFR has committed to maintaining overall
manufacturing levels as well as the current levels of supply;
* Job creation: The combination of Adcock Ingram and CFR is
likely to have a positive effect on long-term employment in
South Africa. CFR plans to transfer the manufacturing of a
significant number of its products to South Africa and India.
The combination and additional investment is also likely to
generate 50 to 100 new jobs within Adcock Ingram. CFR has
confirmed that the Transaction will not result in any loss of
employment in South Africa by Adcock Ingram and has committed
to no retrenchments for a period of 12 months post
implementation of the Scheme;
* Commitment to broad-based black economic empowerment (“B-
BBEE”): CFR understands the importance of B-BBEE and is
committed to ensuring that Adcock Ingram remains appropriately
empowered. True to this commitment, CFR has entered into
separate agreements with Blue Falcon 69 Trading Proprietary
Limited (“Blue Falcon”) and the trustees of the Mpho Ea Bophelo
Trust (“Bophelo Trust”), the holders of the Bophelo Shares
which represent approximately 13% of the total issued share
capital of Adcock Ingram, regarding the retention of their A
Ordinary Shares and B Ordinary Shares (as defined in paragraph
8 below) respectively after implementation of the Scheme; and
* Preserving Adcock Ingram’s heritage: Adcock Ingram is a
significant player in the South African healthcare market, with
strong brands and world-class manufacturing facilities. CFR
intends not only to preserve the Adcock Ingram brand but to
continue to grow it beyond South Africa.
7.5. Adcock Ingram will be an integral part of the combined
business
Post implementation of the Scheme, Adcock Ingram’s business will be
a significant component of the combined group, potentially
generating up to approximately 46% of the combined group’s revenues
based on historic performance.
7.6. Significant synergy potential
CFR is of the view that Adcock Ingram’s world-class manufacturing
facilities will strategically position the combined group to export
South African manufactured products to Latin America and South East
Asia. In addition, the combination of Adcock Ingram and CFR will
open new and attractive markets for Adcock Ingram’s products in
Latin America and South East Asia. Through its strong local
presence, CFR today targets a market of over 500 million patients,
representing a commercial opportunity of approximately US$25
billion in Latin American pharmaceuticals alone.
The combination should unlock significant value through
complementary product portfolios, business structures, geographical
presence and manufacturing footprints. CFR estimates total
synergies arising from the combination of at least US$440 million
(approximately ZAR4.5 billion) on a net present value basis.
* Potential cost synergies: CFR aims to consolidate its
manufacturing footprint and will benefit from the excess
capacity available in the combined group to optimise factory
utilisation rates, resulting in manufacturing efficiencies and
costs reductions. Overall, CFR estimates that the new
manufacturing footprint should generate savings of
approximately US$150 million on a net present value basis
before factoring in Adcock Ingram’s likely lower production
costs, the likely increase in CFR’s gross margins, and the
lower unit production costs Adcock Ingram estimates should
eventuate by increasing the volume and utilisation of its
factories.
* Potential revenue synergies: The combined group will benefit
from a highly complementary and diversified product portfolio.
In particular, CFR believes that significant opportunities
exist in the following areas:
- Anti-retrovirals (“ARV”): Over 1.6 million people are
infected with HIV in Latin America. CFR sees an opportunity
to introduce Adcock Ingram’s ARV portfolio in Latin America.
Based on current prices in Latin America, it is anticipated
that Adcock Ingram’s ARV products would potentially generate
considerable gross margins and that FDA-approved products
would achieve increased pricing, thus generating even higher
gross margins. CFR estimates that this potential business
opportunity represents a net present value in excess of
approximately US$120 million in Latin America;
- Over-the-counter (“OTC”): CFR is of the view that the Latin
American market represents a unique opportunity for Adcock
Ingram’s OTC portfolio. The OTC market in Latin America is a
US$12 billion market growing at a compound annual growth
rate of 12% for the period 2007 to 2012. Mid to lower income
consumers represent the majority of the overall market and
95% of total consumers. The mid to lower income market
segment is characterised by low prices and mass
distribution. CFR’s OTC portfolio is currently positioned
towards higher income consumers and does not target the mid-
to-lower end of the market. Adcock Ingram’s OTC portfolio is
cost competitive and could become a compelling commercial
opportunity. CFR estimates this potential opportunity
represents a net present value of approximately US$80
million; and
- Pipeline contribution: CFR could provide Adcock Ingram with
access to new therapeutic areas, particularly Oncology,
Anaesthesia, Hospital Injectable products (Anti-Infectives),
Biologics and Biosimilars. Conversely, Adcock Ingram could
help CFR grow its presence in Diabetes, Dermatology and
Ophthalmic categories. CFR estimates the pipeline
contribution opportunity represents a net present value of
at least US$80 million.
* Additional synergies from sourcing: CFR believes that through
the combination of the respective active pharmaceutical
ingredient sourcing of Adcock Ingram and CFR, the combined
group could potentially realise efficiencies representing a net
present value of between US$10 million and US$20 million.
8. ARRANGEMENTS WITH HOLDERS OF THE BOPHELO SHARES
CFR has concluded agreements with each of Blue Falcon, a special
purpose vehicle holding all the issued A ordinary shares of Adcock
Ingram (“A Ordinary Shares”) and the trustees of the Bophelo Trust, a
trust holding all the issued B Ordinary shares of Adcock Ingram (“B
Ordinary Shares”), regarding the retention of their Bophelo Shares
after implementation of the Scheme.
Blue Falcon’s B-BBEE shareholders are Kagiso Strategic Investments III
(Proprietary) Limited, the Mookodi Pharma Trust and the Kurisani Youth
Development Trust. The beneficiaries of the Bophelo Trust are the B-
BBEE staff members of the Company.
Blue Falcon holds approximately 19.5 million A Ordinary Shares and
approximately 1.9 million Scheme Shares. The Bophelo Trust holds 6.5
million B Ordinary Shares and approximately 690,000 Scheme Shares.
Collectively, the Bophelo Shares represent approximately 13% of the
entire issued share capital of Adcock Ingram. Save for certain
economic entitlements, the Bophelo Shares rank pari passu with the
Company’s ordinary shares.
Both Blue Falcon and the Bophelo Trust will dispose of their Scheme
Shares pursuant to the Scheme. By agreement, Blue Falcon and the
Bophelo Trust will be required not to vote their A Ordinary Shares and
B Ordinary Shares at the combined general meeting of Adcock Ingram
shareholders which will be convened to approve the Scheme.
The TRP has granted an exemption to CFR from complying with the
provisions of section 125(2)(b) of the Companies Act and the relevant
regulations in light of the separate consensual arrangements which
have been entered into between CFR and Blue Falcon, and between CFR
and the Bophelo Trust. The letter from the TRP granting this exemption
will be made available for inspection from the date of posting of the
joint circular to Adcock Ingram shareholders (referred to in paragraph
20 below).
9. EMPLOYEE SHARE INCENTIVE SCHEME PARTICIPANTS
9.1. Phantom cash option scheme
On implementation of the Scheme, an offer (“the Phantom Offer”)
will be made to the participants in Adcock Ingram’s phantom cash
option scheme (“the Phantom Option Scheme”). In terms of the
Phantom Offer, each holder of phantom scheme options will receive,
on acceptance, cash equal to ZAR73.51 less the grant price of the
relevant phantom option. Currently, there are approximately 3.9
million phantom options outstanding, which will result in a
potential aggregate cash payment being made under the Phantom Offer
to the participants in the Phantom Option Scheme of up to
approximately ZAR82.3 million.
9.2. Employee share option scheme
The Adcock Ingram employee share option scheme (“the Share Option
Scheme”), introduced in 2008, is a long-term employee share
incentive scheme, of which there are approximately 550,000 options
outstanding.
Prior to the record date for the Scheme, each participant in the
Share Option Scheme will be entitled to exercise all his options
under the Share Option Scheme and participate in the Scheme.
10. BAXTER HEALTHCARE S.A. (“BAXTER”)
Subject to the implementation of the Scheme, the existing agreements
with Baxter will be amended and new agreements will come into effect.
Baxter has signed a waiver letter which contains an undertaking by
Baxter not to exercise termination rights in respect of the existing
agreements with Adcock Ingram Critical Care (Proprietary) Limited
(“AICC”) subject to the implementation of the Scheme, the amendment of
the existing agreements with AICC and a new agreement between the
Company, CFR and Baxter becoming effective.
11. MEDREICH LIMITED (“MEDREICH”)
CFR has concluded an agreement with Medreich, the Company’s Indian
joint venture partner, to continue with the joint venture agreement
governing Adcock Ingram India upon implementation of the Scheme.
12. CFR BOARD REPRESENTATION AND MANAGEMENT
12.1. The board of directors of CFR (“CFR Board”)
CFR has undertaken to procure that a person who is a South African
resident and who has knowledge of and expertise in the South
African pharmaceuticals industry will be appointed to the CFR Board
as a second independent director upon implementation of the Scheme
or as soon as possible thereafter.
12.2. Adcock Ingram Board and management
CFR intends to re-constitute the Adcock Ingram Board upon the
implementation of the Scheme. Adcock Ingram’s CEO will continue to
manage Adcock Ingram’s operations for Africa and will report to the
CEO of CFR.
Each of Adcock Ingram’s senior executives will be offered a new
employment contract and incentives that are similar to the
employment contracts and incentives provided to CFR’s current
senior executives. Adcock Ingram management will be subject to
CFR’s performance-based metrics and key performance indicators. CFR
intends to maintain Adcock Ingram’s legacy and track record in
South African labour relations.
13. CONDITIONS PRECEDENT TO THE SCHEME
The implementation of the Scheme is subject to the fulfillment and/or
waiver on or before 14 April 2014, or such later date as may be agreed
in writing between Adcock Ingram and CFR (“Long-Stop Date”), of
conditions precedent summarized as follows:
13.1. the passing of all resolutions by Adcock Ingram shareholders
which are necessary to approve the Scheme (“Scheme Resolutions”);
and
13.1.1. the approval of the Scheme by the High Court of South
Africa, if applicable;
13.1.2. CFR and the Company not treating the Scheme Resolutions
as a nullity as contemplated in section 115(5)(b) of the
Companies Act, if applicable;
13.2. in relation to any objection to the Scheme by Adcock Ingram
shareholders, either:
13.2.1. Adcock Ingram shareholders give notice objecting to the
Scheme as contemplated in section 164(3) of the Companies Act
and vote against the Scheme in respect of no more than 5% of
the total number of issued ordinary shares of Adcock Ingram;
or
13.2.2. if Adcock Ingram shareholders give notice objecting to
the Scheme and vote against the Scheme in respect of more
than 5% of the total number of issued ordinary shares of
Adcock Ingram, Adcock Ingram shareholders do not exercise
appraisal rights in respect of more than 5% of the total
number of issued ordinary shares of Adcock Ingram within 30
business days following the general meetings of Adcock Ingram
shareholders to approve the Scheme;
13.3. all regulatory approvals required to implement the Transaction
are granted, including:
13.3.1. the issue by the Takeover Regulation Panel (“TRP”) of a
compliance certificate with respect to the Scheme;
13.3.2. approval by the South African competition authorities;
13.3.3. approval by the relevant competition authorities in
Kenya, Botswana, Zimbabwe, Swaziland and Namibia, and by the
COMESA Competition Commission;
13.3.4. approval of all arrangements necessary to implement the
Transaction by the South African Reserve Bank, including the
secondary listing of the entire issued share capital of CFR
(including the New CFR Shares) as an “inward listing” for
South African exchange control purposes, as well as the
furnishing of guarantees to the funding banks of CFR and the
holders of notes issued by a CFR group company;
13.3.5. approval by the JSE of:
13.3.5.1. the listing of CFR in the “Healthcare –
Pharmaceuticals & Biotechnology – Pharmaceuticals”
sector of the Main Board of the JSE by way of a
“secondary listing”; and
13.3.5.2. the termination of the listing on the JSE of all of
Adcock Ingram ordinary shares;
13.3.6. the issue of an appropriate ruling by the Chilean Tax
Authority regarding the tax treatment of non-Chilean
domiciled or resident shareholders for Chilean tax purposes
in relation to the holding and trading in beneficial
interests in CFR shares;
13.3.7. registration and approval of the CFR Capital Increase
resolutions of CFR shareholders by the SVS with the Chilean
Securities Registry;
13.3.8. registration of CFR’s prospectus by the Companies and
Intellectual Property Commission;
13.3.9. J.P. Morgan providing an appropriate final fair and
reasonable opinion in relation to the Offer and the Phantom
Offer; and
13.3.10. the Adcock Ingram Board making a recommendation to the
holders of Adcock Ingram Scheme Shares to vote in favour of
the Scheme, and to the holders of phantom options under the
Phantom Option Scheme to accept the Phantom Offer, and to the
holders of the Share Options Scheme to exercise their share
options.
Certain of these conditions may be waived by CFR alone or by agreement
with Adcock Ingram.
In the event that Adcock Ingram and CFR agree to extend the Long-Stop
Date, the total Cash Consideration and the cash payment under the
Phantom Offer shall accrue interest at the South African Prime Rate
from time to time less 3%, compounded on a monthly basis and accrued
daily from the Long-Stop Date to the date on which the Cash
Consideration is discharged in full.
The Scheme will terminate, amongst other things, if the conditions
precedent are not fulfilled or waived prior to the Long-Stop Date.
14. PRO FORMA FINANCIAL EFFECTS OF THE OFFER ON ADCOCK INGRAM ORDINARY
SHAREHOLDERS
The table below sets out the pro forma financial effects of the Scheme
on Adcock Ingram Ordinary Shareholders based on the six-month
financial results of Adcock Ingram to 31 March 2013 and the
assumptions set out below the table. The pro forma financial effects
are a requirement of the Takeover Regulations in order to illustrate
how the Scheme may affect the basic earnings per share (“EPS”),
diluted earnings per share (“DEPS”), headline earnings per share
(“HEPS”), diluted headline earnings per share (“DHEPS”) and dividend
per share (“DPS”) of the Scheme Shares exchanged for New CFR Shares,
assuming the Scheme had become operative on 1 October 2012, and for
the purposes of net asset value per share (“NAVPS”) and net tangible
asset value per share (“NTAVPS”) as if the Scheme had become operative
on 31 March 2013. The table below compares 1 Adcock Ordinary Share
pre-implementation of the Scheme to 1 CFR share post implementation of
the Scheme.
Adcock Ingram Ordinary Shareholders are cautioned that due to the
requirements of the Takeover Regulations and by their nature, the pro
forma financial effects may not fairly present the actual financial
effects of the Scheme and therefore Adcock Ingram shareholders should
not base any investment decision solely on the information provided
below. Adcock Ingram Ordinary Shareholders are reminded that for the
purposes of determining the Scheme Consideration, 1 Adcock Ingram
Ordinary Share is equivalent to approximately 31.5 CFR shares.
Accordingly, Adcock Ingram Ordinary Shareholders are cautioned when
comparing Scheme Shares and CFR shares on a like-for-like basis as
depicted below. In addition, Adcock Ingram Ordinary Shareholders
should note that the table below does not take account of the
potential revenue and cost synergies that have been identified or the
cash impact if the Scheme is implemented.
Pro forma financial Before the After the Percentage
information to 31 March 2013 Scheme Scheme change
Adcock CFR
Ingram (ZAR)
(ZAR)
EPS 1.88 0.018 -99.0%
DEPS 1.88 0.018 -99.0%
HEPS 1.88 0.018 -99.0%
DHEPS 1.88 0.018 -99.0%
NAVPS 22.03 1.05 -95.2%
NTAVPS 13.06 -0.40 -103.1%
Weighted average number of 168,696 11,062,226
shares in issue (‘000)
Shares in issue at period end 168,582 11,062,226
(‘000)
Diluted number of shares 168,868 11,137,876
Notes:
The pro forma financial information assumes a minimum of 51.0% of the
Scheme Consideration will be settled in cash and a maximum of 49.0% of
the Scheme Consideration will be settled in New CFR Shares.
1. The financial information in the “Before the Scheme” column was
arrived at by using the Adcock Ingram’s reviewed financial results
and number of shares in issue as published for the period ended 31
March 2013
2. The financial information included in the “After the Scheme” was
arrived at using CFR’s consolidated pro forma financial results for
the period ended 31 March 2013 and number of shares that will be in
issue after the implementation of the Scheme. CFR’s financial
information is unaudited and has not been reviewed
3. All income statement information was converted at an average
exchange rate of ZAR8.40:US$1
4. All balance sheet information was converted at the closing exchange
rate of ZAR9.21:US$1
5. The Adcock Ingram Group financial information has been extracted
from the Adcock Ingram Group reviewed financial statements for the
six month period ended 31 March 2013. This financial information
has been adjusted for conversion from ZAR to US$ and compliance
with CFR accounting policies. The Scheme Consideration is assumed
to be funded by new bank debt of approximately US$600 million,
cash-on-hand and the issue of approximately 2.6 billion New CFR
Shares. An interest rate of 6% per annum is assumed (included
Chilean taxation of 20%)
6. Estimated non-recurring transaction costs of US$55.7 million are
included, of which US$35.8 million are expensed through the
statement of comprehensive income. These transaction costs will be
paid out of available cash resources and are assumed to be tax
deductible in Chile and South Africa respectively. The transaction
costs are attributable to various professional advisers, debt
issuance, regulatory authorities and printing costs
7. The pro forma financial information does not take into
consideration the impact of the agreements with the holders of the
Bophelo Shares
15. SHAREHOLDER SUPPORT
CFR has received significant support for the Offer from Adcock Ingram
shareholders. Adcock Ingram shareholders representing approximately
45.1% of the total issued share capital of Adcock Ingram (excluding
the Treasury Shares but including the A Ordinary Shares and B Ordinary
Shares, representing approximately 13% of the total issued share
capital of Adcock Ingram. As noted below, the holders of the A
Ordinary Shares and the B Ordinary Shares, will not vote their A
Ordinary Shares and B Ordinary Shares at the general meetings to
approve the Scheme) have pledged support for the Scheme.
As at the date of this announcement, the following Adcock Ingram
Ordinary Shareholders representing approximately 29.3% of the Scheme
Shares eligible to vote at a general meeting of the Adcock Ingram
shareholders have irrevocably undertaken to vote in favour of the
Scheme Resolutions:
Adcock Ingram shareholder Adcock % of % of total
Ingram Adcock share
shares Ingram capital of
held Ordinary Adcock
Shares Ingram
eligible
to vote
Visio Capital Management (Pty) 15,000,000
Ltd and Mazi Visio Manco (Pty)
Ltd 8.8% 7.6%
Sanlam Investment Management 5,520,000
(Pty) Ltd 3.2% 2.8%
ABSA Asset Management (Pty) Ltd 8,483,933 5.0% 4.3%
Stanlib Asset Management Ltd 6,193,195 3.6% 3.1%
Tiger Brands Black Management
Trust 1 and Thusani Empowerment 5,827,301 3.4% 3.0%
Investment Holdings (Pty) Ltd
Afena Capital 3,416,674 2.0% 1.7%
36One Asset Management (Pty) Ltd 3,100,000 1.8% 1.6%
Total (excluding the Bophelo 47,541,103
Shares) 27.8% 24.2%
Blue Falcon – A Ordinary Shares 19,458,196 0.0% 9.9%
Bophelo Trust – B Ordinary Shares 6,486,065 0.0% 3.3%
Blue Falcon – Scheme Shares 1,883,000 1.1% 1.0%
Bophelo Trust – Scheme Shares 688,000 0.4% 0.3%
Total (including the Bophelo 76,056,364
Shares) 29.3% 38.6%
The A Ordinary Shares and the B Ordinary Shares rank pari passu with
the Company’s ordinary shares in terms of voting rights. Post the
announcement published by Adcock Ingram on SENS on 30 October 2013, it
has been agreed that Blue Falcon and the Bophelo Trust will be
instructed pursuant to the agreements referred to in paragraph 8 above
to not vote their A Ordinary Shares and B Ordinary Shares respectively
at the general meetings to approve the Scheme Resolutions.
In addition to the above, a letter of support has been received from
Prudential Portfolio Managers (South Africa) (Pty) Ltd, who represent
approximately 7.5% of the Scheme Shares eligible to vote at a general
meeting of the Adcock Ingram shareholders.
16. OPINIONS AND RECOMMENDATIONS
The Adcock Ingram Board has appointed J.P. Morgan to act as
independent expert to review the terms of the Scheme and the Phantom
Offer and to provide a fair and reasonable opinion as required under
section 114(3) of the Companies Act and Regulation 90 of the Takeover
Regulations.
Based on its independently performed procedures, J.P. Morgan has
indicated that, in its opinion, as at the date of this announcement,
the terms of the Offer and the Phantom Offer are fair and reasonable
to Adcock Ingram Ordinary Shareholders and to the participants in the
Phantom Option Scheme respectively.
The Adcock Ingram Board, having considered the terms of the Offer and
the Phantom Offer and the opinion of J.P. Morgan, has resolved to
unanimously support the Scheme and intends to propose the Scheme and
to unanimously recommend that Adcock Ingram Ordinary Shareholders vote
in favour of the Scheme and that the participants in the Phantom
Scheme accept the Phantom Offer.
17. GUARANTEES AND CONFIRMATIONS TO THE TRP
In order to secure the discharge by CFR of the Cash Consideration:
* CFR has entered into a bridge loan and related financing
arrangements with a group of international banks to provide the
majority of the minimum Cash Consideration (i.e. 51.0% of the
Scheme Consideration) and settle the transaction costs. Citibank
South Africa has furnished an irrevocable, unconditional bank
guarantee to the TRP in respect of the minimum Cash Consideration;
and
* CFR has undertaken to transfer the Capital Increase Amount, if
any, into a designated escrow account with Citibank London after
completion of the Pre-emptive Rights Offer. The Capital Increase
Amount (defined in paragraph 4.2 above) will be converted into ZAR
and credited to a ZAR-denominated escrow account with Citibank
South Africa prior to the finalisation date of the Scheme.
CFR has confirmed to the TRP that, upon completion of the CFR Capital
Increase and Pre-emptive Rights Offer, it will have a sufficient
number of authorised and unissued CFR shares available to issue and
place in order to satisfy the Share Consideration.
18. CFR’s SECONDARY LISTING ON THE JSE
The JSE has, subject to the implementation of the Scheme, approved the
application for the listing of the entire issued share capital of CFR,
including the New CFR Shares, on the JSE by way of a “secondary
listing”. Subject to implementation of the Scheme and upon listing on
the JSE, the CFR shares will be regarded as inward listed shares with
domestic status in terms of the provisions of Section H of the
Exchange Control Rulings, which provisions will apply to the
acquisition of New CFR Shares by South African residents. The New CFR
Shares comprising the Share Consideration will be issued to PLC
Nominees as registered holder of the New CFR Shares for the benefit of
the participants in the Scheme.
19. SUSPENSION AND TERMINATION OF THE ADCOCK INGRAM LISTING
Subject to the Scheme becoming unconditional, application has been
made to the JSE for the suspension and subsequent termination of the
listing on the Main Board of the JSE of the ordinary shares of Adcock
Ingram.
20. DOCUMENTATION AND TIMING
The Scheme provides for an arrangement between Adcock Ingram and the
holders of Scheme Shares only. Full details of the Scheme will be
included in a joint circular which will be distributed by Adcock
Ingram and CFR to Adcock Ingram shareholders shortly containing, inter
alia, notices of the general meetings of Adcock Ingram shareholders to
approve the Scheme, a form of proxy, a form of surrender and transfer,
and the salient dates and times applicable to the Scheme. The joint
circular will be accompanied by a combined pre-listing statement and
prospectus regarding CFR as it will be constituted after
implementation of the Scheme.
21. SHAREHOLDINGS IN ADCOCK INGRAM AND ACTING AS PRINCIPAL
Neither CFR nor any of its directors currently hold or control any
Adcock Ingram shares or options to acquire Adcock Ingram shares.
CFR confirms that it or a wholly-owned subsidiary of CFR is the
ultimate prospective acquirer of the Scheme Shares and is acting alone
and not in conjunction with, or as agent or broker for, any other
party.
22. GOVERNING LAW AND JURISDICTION
The Scheme is governed by the laws of South Africa and is subject to
applicable South African laws and regulations, including the Companies
Act, the Takeover Regulations and the JSE Listings Requirements.
23. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Adcock Ingram shareholders are advised that the cautionary
announcement published on 11 September 2013 and renewed on 30 October
2013 is hereby withdrawn and caution is no longer required to be
exercised by Adcock Ingram shareholders when dealing in the Company’s
securities.
24. RESPONSIBILITY STATEMENTS
The Adcock Ingram Independent Board and the Adcock Ingram Board accept
responsibility for the information contained in this announcement
insofar as it relates to Adcock Ingram. To the best of their
knowledge, the information contained in this announcement is true and
this announcement does not omit anything likely to affect the import
of the information.
The CFR Board accepts responsibility for the information contained in
this announcement insofar as it relates to CFR. To the best of its
knowledge, the information contained in this announcement is true and
the announcement does not omit anything likely to affect the import of
the information.
For Adcock Ingram media enquiries:
Brunswick
Tel: +27 11 502 7300
Carol Roos
+27 72 690 1230
Marina Bidoli
+27 83 253 0478
For CFR media enquiries:
College Hill
Amelia Soares
+27 82 654 9241
Mark Garraway
+27 82 610 1226
Midrand
15 November 2013
Financial Adviser and Sponsor to Adcock Ingram
Deutsche Bank
Legal Adviser to Adcock Ingram in South Africa
Read Hope Phillips Attorneys
Legal Adviser to Adcock Ingram in Chile
Prieto y Cia
Reporting Accountants to Adcock Ingram
EY
Public Relations Adviser to Adcock Ingram
Brunswick
Independent Expert to the Adcock Ingram Board
JPMorgan Chase Bank, N.A. (Johannesburg Branch)
Financial Adviser to CFR
Credit Suisse
Legal Adviser to CFR in South Africa
Bowman Gilfillan Inc.
Legal Adviser to CFR in Chile
Honorato Russi & Eguiguren Limitada
Reporting Accountants to CFR
Deloitte & Touche
Public Relations Adviser to CFR
College Hill
GENERAL
The release, publication or distribution of this announcement in
jurisdictions other than South Africa may be restricted by law and,
therefore, any persons who are subject to the laws of any jurisdiction
other than South Africa should inform themselves about and observe any
applicable requirements in those jurisdictions. The information
disclosed may not be the same as that which would have been disclosed if
this announcement had been prepared in accordance with the laws and
regulations of any jurisdiction other than South Africa.
This announcement is not intended to, and does not, constitute, or form
part of, an offer to sell or an invitation to purchase or subscribe for
any securities or a solicitation of any vote or approval in any
jurisdiction. This announcement does not constitute a prospectus or a
prospectus equivalent document. Shareholders are advised to read
carefully any formal documentation in relation to the Offer. The Offer
will be made solely through a circular, which will contain the full
terms and conditions of the Offer. Any decision to accept the Scheme of
other response to the proposals should be made only on the basis of the
information contained in the circular containing the Offer.
This announcement by Adcock Ingram and CFR is made in connection an
offer for the securities of a South African company Adcock Ingram by
means of a Scheme. The Offer is subject to disclosure requirements under
South African law that are different from those of the United States and
Chile. Financial statements included in this announcement have been
prepared in accordance with South African accounting standards that may
not be comparable to the financial statements of United States or
Chilean companies.
It may be difficult for you to enforce your rights and any claim you may
have arising under the United States federal securities laws, since
Adcock Ingram is located in South Africa, and all of its officers and
directors reside outside of the United States. You may not be able to
sue Adcock Ingram or its officers or directors in a foreign court,
including South African courts, for violations of the Unites States
securities laws. It may be difficult to compel Adcock Ingram and its
affiliates to subject themselves to a United States court's judgment.
You should be aware that CFR may purchase Adcock Ingram ordinary shares
otherwise than under the Offer, such as in open market or privately
negotiated purchases.
Deutsche Securities (SA) Proprietary Limited (“Deutsche Bank”), a non-
bank member of the Deutsche Bank Group, is acting for Adcock Ingram and
no one else in connection with the Offer and will not be responsible to
anyone other than Adcock Ingram for providing the protections afforded
to clients of Deutsche Bank or for providing advice in relation to the
Offer.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this announcement may be considered forward-
looking. Although (1) Adcock Ingram believes that the expectations
reflected in any such forward-looking statements relating to Adcock
Ingram are reasonable, and (2) CFR believes that the expectations
reflected in any such forward-looking statements relating to CFR are
reasonable, no assurance can be given by Adcock Ingram or CFR that such
expectations will prove to be correct. Adcock Ingram and CFR do not
undertake any obligation to publicly update or revise any of the
information given in this announcement that may be deemed to be forward-
looking.
Date: 15/11/2013 02:17:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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