The total consideration will be about $512 m
Sweet Consortium, which holds 18 per cent stake in Cipla Medpro, wants Cipla to sweeten its offer price from the proposed South African Rand 10 per share (1 Rand = Rs.5.94) 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.
Johannesburg Stock Exchange (JSE)-listed Cipla Medpro is a South African affiliate of Bombay Stock Exchange-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 Rand 9.50,” Mr. Moyo was quoted as saying in the report.
On February 28, Cipla informed the BSE that its board had made a firm offer to the Medpro board to acquire 100 per cent of the ordinary shares of Medpro at a price of Rand 10 per share, and to settle all outstanding share options therein.
At Rand 10 a share, Cipla’s offer was 17 per cent more than the Rand 8.55 a share it had proposed in November 2012 for buying 51 per cent of Cipla Medpro.
The total consideration payable by Cipla would be about $512 million at Rand 10 a share.
Cipla had also said that its Rand 10 offer was at a 46.7 per cent premium on the value of Cipla Medpro’s share price in May 2012, when speculation around the takeover bid first started. Mr. Moyo said there had been significant change since then, particularly the lucrative Rand 1.45 billion tender won by Cipla Medpro for the supply of anti-retroviral drugs to the South African Government.