Sweet Consortium wants Cipla to increase its offer price

The total consideration will be about $512 m

A man walks past the Cipla manufacturing unit on the outskirts of Mumbai, India, Thursday, Feb 9, 2012. Efforts by India and the European Union to strengthen trade are threatening India's ability to deliver life-saving medicines to the world's poorest, analysts say as the two sides resume protracted negotiations on a free-trade pact. Health industry workers and activists worry that India may bow to EU demands for strict intellectual property protections and investor guarantees, which could result in the slow poisoning of its own generic pharmaceutical industry. India's $26 billion drug industry has become an immense profit engine, growing at 15-25 percent a year _ but also a lifeline for millions of patients in poor countries, many in Africa, unable to pay sky-high Western prices to treat illnesses that include HIV, malaria, asthma and cancer. (AP Photo/Rafiq Maqbool)

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.