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Chairman's Statement
Adcock Ingram Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 2007/016236/06
ISIN: ZAE000123436
Share code: AIP
(“Adcock Ingram” or “the Company”)
CHAIRMAN’S STATEMENT
The last 10 months have been an extraordinary period in the long history of Adcock Ingram. In light of the
developments that have unfolded, I would like to address you briefly on matters related to the announcement we
made earlier, as well as the process followed by the Independent Board in the interest of shareholders and the
Company.
You may have seen our SENS announcement with regard to approximately 39 million Adcock Ingram ordinary shares
(equating to approximately 22% of the issued ordinary share capital of the Company) which traded yesterday,
30 January 2014.
Shareholders will be aware that the Public Investment Corporation and The Bidvest Group Limited, which held more
than 25% of the Adcock Ingram Ordinary Shares in aggregate prior to yesterday, have each publicly expressed its
opposition to the scheme of arrangement proposed between Adcock Ingram regarding the offer from CFR
Pharmaceuticals to be voted on at the Combined General Meeting and the Ordinary General Meeting which were
adjourned in December 2013. Since the General Meetings were adjourned in December 2013, the Independent
Board understands that CFR has been attempting to engage with the PIC in an attempt to address its concerns in
relation to the Scheme.
The Independent Board has received confirmation that most of the approximately 39 million Adcock Ingram
Ordinary Shares that traded yesterday were acquired by the consortium comprising Bidvest and Community
Investment Holdings Proprietary Limited. As a consequence, the Bidvest Consortium, which now holds 32% of the
Adcock Ingram Ordinary Shares, is in a position to unilaterally block the approval of the Scheme.
In the circumstances, the Independent Board cannot envisage a realistic basis on which the Scheme will be
approved. However, unless and until otherwise agreed between the Company and CFR (and subject also to any
regulatory approvals that may be required) the Company and CFR remain bound in terms of the Transaction
Implementation Agreement entered into between them on 11 September 2013 to proceed with the proposal of the
Scheme to Adcock Ingram Ordinary Shareholders at the adjourned General Meetings. The Independent Board will
be urgently engaging with CFR regarding the implications of these developments for the Scheme and the TIA.
I would now like to briefly review the process the Independent Board has followed to date:
The process of dealing with corporate action since March 2013 has been run by the Independent Board, made up of
the non-executive directors of the Company. The Independent Board has been motivated solely by its duties to the
Company and to maximize value for its shareholders.
After a rigorous process during which the Independent Board engaged with various interested parties and assessed a
number of proposals received, the Independent Board put before shareholders a proposal that it believed met its
mandate and benchmarks. It provided the option of a fully-funded, cash and shares offer available to all
shareholders at a nominal value of R74.50 per Adcock Ingram share. This proposal was a strategic fit for the
company providing long-term growth prospects, and enjoyed strong support from Adcock Ingram shareholders.
The Board of course understood that it would ultimately be the decision of shareholders whether to accept, or not
to accept the Scheme of Arrangement regarding the transaction with CFR. The Adcock Ingram Board accepts that it
has not been possible to address the concerns of those shareholders that objected to the proposed scheme. The
Company’s Board and Management remain committed to working with all shareholders to maximise long-term value
for both the company and the shareholders.
The company has also issued a trading statement advising shareholders that Adcock Ingram’s HEPS for the six-month
period ending 31 March 2014 from continuing operations are expected to be more than 20% lower than the
previous corresponding period’s figure of 188.1 cents. Further detail is available in the SENS announcement.
Finally, and before turning to the important business of the meeting, I must advise shareholders of an administrative
error that has occurred. The remuneration of non-executive directors for their services as directors was last
approved by Adcock Ingram Shareholders by way of a special resolution in January 2012, with the support of 90.7%
of the voting rights exercised on that resolution. This authority was limited in time. The resolution in the Notice of
the Annual General Meeting in 2013 which was intended to authorise the payment of increased remuneration to
non-executive directors was withdrawn, and was not re-submitted to Adcock Ingram Shareholders, in the belief that
the authority provided in 2012 would continue to apply for the full statutory period of two years. We learnt last
week that this understanding was incorrect. In fact, that resolution was in its terms applicable only from 1 February
2012 until the next Annual General Meeting, which took place on Thursday, 31 January 2013.
In the first quarterly meeting of the 2014 financial year, held in December 2013, the board resolved not to seek
authority from shareholders for an increase in directors’ remuneration over the levels approved in 2012. In the
circumstances a resolution to maintain non-executive directors’ remuneration at previous levels ought to have been
included in the notice calling for the 2014 AGM. However, due an administrative error this did not happen.
Authority by way of special resolution is accordingly required to authorise payment now to non-executive directors
of remuneration for the period from 1 February 2013.
On discovering the above oversight, the Board immediately resolved to take the necessary steps to inform
Shareholders, recover the monies paid without Shareholder authority and to enable Shareholders to consider
providing authority for the payment of remuneration to non-executive directors. To this end, the company will be
convening an Extraordinary General Meeting to take place in early March 2014 to consider and, if deemed fit, to
approve the required Special Resolutions providing for the remuneration of the non-executive directors.
In conclusion, this has been a challenging time for Adcock Ingram and its people. The Independent Board process has
required significant time and attention from the non-executive directors of Adcock Ingram and I would like to thank
my colleagues on the Independent Board for their efforts. I would also like to thank the management team and the
hardworking and dedicated men and women who drive Adcock Ingram’s day-to-day operations, for their ongoing
effort and commitment to the Company.
Midrand
31 January 2014
Sponsor
Deutsche Securities (SA) Proprietary Limited
Date: 31/01/2014 02:00:00 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,
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