Indian pharmaceutical company Natco Pharma has partnered with Bidvest to take local drugmaker Adcock Ingram private — adding to a wave of JSE delistings that continues to shrink investor options on the local bourse.
The deal, worth R75 per ordinary share, will see Bidvest retain its existing stake of 64%, while Natco Pharma will hold the rest, Adcock said on Wednesday.
The transaction will see Adcock, which debuted on the JSE in 2008, delist from the local bourse and operate as a privately held company.
The company’s share price rose 24% after the news.
Adcock Ingram operates across consumer healthcare, over-the-counter products, prescription medicines and hospital supplies. Its portfolio includes well-known brands such as Panado, Compral, Corenza-C and Adco-Dol, along with various cough and allergy medications.
The company also supplies antiretroviral medicines and critical care products — including intravenous fluids and renal dialysis treatments — to SA’s public health sector. Many of its products are manufactured locally at three main facilities in SA.
Bidvest’s controlling stake in Adcock Ingram was built through a series of share acquisitions. In 2019, it raised its holding to more than 50%, partly by purchasing shares after the termination of Adcock's broad-based BEE scheme.
After the increase, Bidvest’s then-CEO Lindsay Ralphs was appointed chair of Adcock Ingram, effective July 1 2019.
Bidvest’s involvement with Adcock Ingram included a legal dispute stemming from a 2013—14 takeover attempt by Chile-based CFR Pharmaceuticals, now owned by US-based multinational medical devices and healthcare company Abbott Laboratories.
Bidvest challenged the financial assistance provided to CFR, arguing it contravened the Companies Act and was detrimental to shareholders. The legal action preceded the collapse of CFR’s bid, leading to Bidvest eventually increasing its stake.
“Since acquiring our shareholding in Adcock Ingram over a decade ago, Bidvest has been actively involved and aligned with management on the company’s growth focus to expand its portfolio of products,” said Mpumi Madisa, chair of Adcock Ingram and Bidvest CEO.
“Bidvest is supportive of the cash offer being made by Natco Pharma, which unlocks numerous synergies and enables a partnership to further expand Adcock Ingram’s product and geographic diversification.”
Natco Pharma, founded in 1981 and based in Hyderabad, India, is a pharmaceutical company listed on both the Bombay and National stock exchanges in India, and specialises in generic and oncology medicines.
It operates globally, with a presence in international markets including the US, Europe, Canada, Latin America, Southeast Asia, and the Middle East and North Africa.
In partnership with majority shareholder Bidvest, the Indian drugmaker plans to tap into Adcock’s existing infrastructure and regional expertise.
The deal will be financed through Natco’s internal cash reserves and backed by a R4bn irrevocable bank guarantee from Investec.
The deal has received the backing of Adcock’s independent board, which has recommended the offer to shareholders, calling the terms both fair and reasonable.
The deal forms part of a wider trend of companies delisting from the JSE. Over the past two decades, the number of companies on the bourse has steadily declined from about 850 in the late 1990s to just less than 300 now.
Several factors contribute to this pattern, including the high costs and regulatory compliance burdens associated with maintaining a public listing, especially for small and mid-sized companies.
Other drivers include mergers & acquisitions, management buyouts and some companies seeking to restructure away from public market scrutiny.
Foreign acquisitions have also played a role, with some companies choosing to delist after being taken over by international investors.
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