|
| Adcock drops takeover plans for Cipla Medpro |
| BS Reporter / Mumbai Jun 03, 2009, 00:34 IST |
|
Potential risk of retributive action by Cipla India with respect to its commercial relationship with CMSA forced the decision.
South African drug major Adcock Ingram has dropped its proposed hostile takeover of another South African drug company, Cipla Medpro SA, mainly due to stiff opposition to the deal from Indian drug maker Cipla, which has a long-term marketing deal with the latter.
Adcock Ingram today said Cipla Medpro failed to give its views on the deal’s merits and has instead highlighted the opposition of its principal supplier, Cipla India, to discourage Adcock from proceeding.
“Given the lack of response from the CMSA (Cipla Medpro) Board, the uncertainty over the precise nature of the contractual relationship between Cipla India and CMSA, and the potential risk of retributive action by Cipla India with respect to its commercial relationship with CMSA, the prospect of successfully completing a commercially viable transaction is no longer possible,” said Jonathan Louw, chief executive of Adcock Ingram in a press release.
“The existing management of Cipla Medpro has taken that company to the present heights and so we cannot support a hostile takeover. Further, we see Adcock as a competitor for Cipla in the South African market,” Amar Lulla, joint managing director of Cipla told Business Standard.
On April 9, Johannesburg-based Adcock, the second largest generic drug maker in South Africa, had announced its intention to make an offer to acquire the entire issued share capital of $100 million in Cipla Medpro for close to $233 million or 2.13 billion Rand. Cipla Medpro’s chief executive, Jerome Smith, and Sweet Sensations, its largest shareholder with 18.5 per cent, opposed the proposal.
Adcock Ingram’s management claimed support from almost 35 per cent of Cipla Medpro’s shareholders.
India’s Cipla doesn’t own any stake in Cipla Medpro, but is the key supplier. Cipla Medpro sells many key prescription antibiotics and HIV/AIDS drugs in the South African market. The two have a 20-year marketing arrangement.
Today, Adcock said it was the duty of Cipla Medpro to convince Cipla India to go for the deal, which it failed to do. Adcock’s chief executive, Dr Jonathan Louw, had met Amar Lulla, on several occasions over the past two years to discuss the mutual benefit of a possible merger of Adcock and CMSA, said a press release. “He had met me before on this deal and I had said No to that,” replied Lulla.
Sources said Cipla is estimated to earn about 15 per cent of its export revenues from the deal it has with Cipla Medpro. However, Amar Lulla has not confirmed this. Cipla exports over 34 per cent of its production, mainly HIV/AIDS drugs, to the African continent.
A combined Adcock-Cipla Medpro could corner a generic drug market share of over 25 per cent in South Africa, Louw had earlier told Business Standard in a telephonic conversation.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
