|
Joint Firm Intention Announcement: Offer by Natco Pharma, Delisting of Adcock Ingram and Withdrawal of Cautionary
ADCOCK INGRAM HOLDINGS LIMITED
(Incorporated in South Africa)
(Registration Number: 2007/016236/06)
JSE Share Code: AIP
ISIN: ZAE000123436
("Adcock Ingram" or "Company")
NATCO PHARMA LIMITED
(Incorporated in India)
(Corporate Identification Number: L24230TG1981PLC003201)
("Natco Pharma" or "Offeror")
JOINT ANNOUNCEMENT REGARDING THE FIRM INTENTION BY NATCO PHARMA TO ACQUIRE ALL
THE ELIGIBLE ISSUED ORDINARY SHARES OF ADCOCK INGRAM BY WAY OF A SCHEME OF
ARRANGEMENT AND THE SUBSEQUENT DELISTING OF ADCOCK INGRAM FROM THE MAIN
BOARD OF THE JSE AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
1.1 Reference is made to the cautionary announcement published on the Stock Exchange News
Service ("SENS") of the JSE Limited ("JSE") on Tuesday, 22 July 2025.
1.2 Reference is made to the announcement released on the Bombay Stock Exchange ("BSE")
and National Stock Exchange of India ("NSE") by Natco Pharma today, 23 July 2025,
concerning the Offer (as described below) ("India Announcement"). A copy of the India
Announcement is available on Natco Pharma's website at
https://www.natcopharma.co.in/investor-relations.
1.3 Holders of Adcock Ingram ordinary shares ("Adcock Ingram Shareholders") are hereby
advised that the Company has concluded an implementation agreement with Natco Pharma
(the "Implementation Agreement") regarding the terms and conditions of an offer from Natco
Pharma to acquire all of the issued ordinary shares in Adcock Ingram ("Ordinary Shares"),
other than those already held by Natco Pharma, currently owned by The Bidvest Group
Limited ("Bidvest") and treasury shares of Adcock Ingram (collectively, the "Excluded
Shares") ("Offer"). In terms of the Implementation Agreement, the salient terms of the Offer
are as follows:
1.3.1 a cash consideration of ZAR75.00 (seventy-five Rand) for each Ordinary Share
other than the Excluded Shares ("Per Share Scheme Consideration"); and
1.3.2 the Offer, subject to the fulfilment or waiver of the Scheme Conditions Precedent
(as defined in paragraph 5.3 below), will be effected by way of a scheme of
arrangement in terms of section 114 of the Companies Act, 71 of 2008
("Companies Act") (read with section 115 of the Companies Act) between the
Company and the Adcock Ingram Shareholders, excluding the holders of
Excluded Shares ("Scheme"), proposed by the board of directors of the Company
(the "Adcock Ingram Board") to the Adcock Ingram Shareholders.
1.4 In the event that the Offer is implemented, it would result in the delisting of all the Ordinary
Shares from the Main Board of the securities exchange operated by the JSE, and on a fully-
diluted basis, Bidvest will remain the controlling shareholder (owning approximately 64.25%
of the Ordinary Shares) and Natco Pharma becoming a co-shareholder (and owning
approximately 35.75% of the Ordinary Shares) in the delisted Adcock Ingram.
1.5 In relation to the Scheme, Bidvest has concluded a Non-Participation and Waiver agreement
with Natco Pharma in terms of which Bidvest has agreed not to participate in the Scheme,
qualifying it as acting in concert as provided for in section 117(1)(b) of the Companies Act.
1.6 The Adcock Ingram Board has in accordance with Regulation 108 of the Takeover Regulations
constituted an independent board (the "Adcock Ingram Independent Board") comprising
Ms. Busisiwe Mabuza, Dr. Sibongile Gumbi, Dr. Claudia Manning, Ms. Debbie Ransby and
Prof. Michael Sathekge to, inter alia, consider the terms of the Offer and make a
recommendation to the Ordinary Shareholders. The Adcock Ingram Independent Board has
resolved to recommend the Offer to the Adcock Ingram Shareholders.
1.7 The purpose of this announcement ("Firm Intention Announcement") is to advise the Adcock
Ingram Shareholders of the Offeror's firm intention to proceed with the Offer and specifically
the key terms and conditions of the Offer.
1.8 The Offer will not be a categorised transaction for the Company in terms of the Listings
Requirements of the JSE and will be regulated by the Takeover Regulation Panel ("TRP").
2. OVERVIEW OF THE COMPANY
Adcock Ingram is a pharmaceutical company, which engages in the manufacture, marketing, and
distribution of healthcare products to both private and public sectors of the market. It operates through
the following segments: Consumer, Over the Counter (OTC), Prescription, Hospital, and Other Shared
Services.
3. OVERVIEW OF NATCO PHARMA
3.1 Natco Pharma is a public company, listed on the BSE and the NSE and headquartered in
Hyderabad, India.
3.2 Established in 1981, Natco Pharma has progressively developed into a diversified
pharmaceutical manufacturer with a principal emphasis on research and development,
manufacturing, and global marketing of both finished dosage formulations and active
pharmaceutical ingredients. Natco Pharma operates across various geographies (in over 50
countries), including emerging and developed markets, with a particular focus on delivering
quality medicines in oncology, cardiology, neurology, and other high-value therapeutic
categories.
4. RATIONALE FOR THE SCHEME
4.1 Through the Offer, Natco Pharma will acquire a significant minority shareholding in Adcock
Ingram alongside Bidvest. As a private company, Natco and Bidvest will seek new revenue
streams and opportunities for the Company to expand its footprint in one of the largest and
growing markets on the African continent.
4.2 Adcock Ingram currently has a small free float with very limited traded liquidity. The Per Share
Scheme Consideration represents a premium of 43.7% to the closing share price, 49.6% to
the 30-day volume-weighted average price and 51.4% to the 90-day volume-weighted
average price as at the close of trade on 21 July 2025, being the last trading day prior to the
cautionary announcement, published on SENS on Tuesday 22 July 2025 ("Pre-Cautionary
Date"). The Offer, therefore provides eligible Adcock Ingram Shareholders with the opportunity
to realise a material premium on the value of their Ordinary Shares.
5. TERMS AND CONDITIONS OF THE SCHEME
The Scheme is an "affected transaction" as defined in section 117(1)(c)(iii) of the Companies Act and,
as such, is regulated by the Companies Act and the Takeover Regulations. The salient terms of and
other information pertaining to the Scheme are set out below.
5.1 Overview of the Scheme
5.1.1 The Company will propose the Scheme between the Company and the Ordinary
Shareholders (excluding the holders of the Excluded Shares) ("Scheme
Participants").
5.1.2 If the Scheme Conditions Precedent (as defined in paragraph 5.3 below) are
fulfilled or, where applicable, waived, then, subject to issue by the TRP of the
compliance certificate referred to in paragraph 6 below, on the date on which the
Scheme is to be implemented, being the Monday immediately following the
Scheme Record Date (as will be defined in the Scheme circular to be distributed
to Adcock Ingram Shareholders ("Scheme Circular")) (or such other date as the
Offeror and the Company, with the consent of the JSE and TRP, if required, may
agree in writing) ("Scheme Implementation Date"):
5.1.2.1 the Offeror shall:
5.1.2.1.1 acquire all the Ordinary Shares (excluding the
Excluded Shares) ("Scheme Shares") from the
Scheme Participants; and
5.1.2.1.2 settle the Per Share Scheme Consideration in
relation to all the Scheme Shares; and
5.1.2.2 each Scheme Participant shall receive the Per Share Scheme
Consideration.
5.2 Scheme Consideration
The consideration payable by the Offeror to the Scheme Participants for their Scheme Shares
is the Per Share Scheme Consideration. The Per Share Scheme Consideration represents a
premium of 43.7%, to the closing price of the Ordinary Shares on the JSE on the Pre-
Cautionary Date.
5.3 Scheme Conditions Precedent
5.3.1 The implementation of the Scheme will be subject to the fulfilment or waiver, as
the case may be, of each of the following conditions precedent by no later than
the date falling 120 days from the Signature Date (the "Longstop Date") or such
later date/s as may be agreed in writing from time to time between the Offeror
and the Company ("Scheme Conditions Precedent"):
5.3.1.1 either:
5.3.1.1.1 no Adcock Ingram Shareholder (i) gives notice
objecting to the scheme resolution to be proposed to
the Adcock Ingram Shareholders seeking their
approval of the Scheme (the "Scheme
Resolution"), as contemplated in section 164(3) of
the Companies Act and (ii) votes against the
Scheme Resolution at the General Meeting of the
Adcock Ingram Shareholders at which the Scheme
Resolution will be proposed (the "General
Meeting"); or
5.3.1.1.2 if any Adcock Ingram Shareholder gives notice
objecting to the Scheme Resolution as contemplated
in section 164(3) of the Companies Act and then
votes against the Scheme Resolution at the General
Meeting, the Adcock Ingram Shareholders holding
no more than 5% of all of the issued the Ordinary
Shares give such notice objecting to the Scheme
Resolution as contemplated in section 164(3) of the
Companies Act and vote against the Scheme
Resolution at the General Meeting; or
5.3.1.1.3 if any Adcock Ingram Shareholder gives notice
objecting to the Scheme Resolution as contemplated
in section 164(3) of the Companies Act and then
votes against the Scheme Resolution at the General
Meeting in respect of more than 5% of all of the
issued Ordinary Shares, such shareholders exercise
their Appraisal Rights, by giving valid demands in
terms of sections 164(5) to 164(8) of the Companies
Act, in respect of no more than 5% of all of the issued
Ordinary Shares within the maximum period
permitted by the Companies Act;
5.3.1.2 the Scheme Resolution is approved by the requisite majority of votes
at the General Meeting and as contemplated in section 115(2) of the
Companies Act;
5.3.1.3 to the extent required in terms of the Companies Act, the High Court
of South Africa approves the implementation of the Scheme
Resolution;
5.3.1.4 if any person who voted against the Scheme Resolution has applied
to court for a review of the Scheme in terms of section 115(3)(b) and
section 115(6) of the Companies Act either:
5.3.1.4.1 leave to apply to the High Court of South Africa for
any such review is refused; or
5.3.1.4.2 if leave is so granted, the High Court of South Africa
refuses to set aside the Scheme Resolution;
5.3.1.5 save for the requirement that the TRP has issued a compliance
certificate with respect to the Offer in terms of section 121(b) of the
Companies Act, all regulatory approvals, consents or waivers
required to implement the Offer are obtained, including:
5.3.1.5.1 the JSE grants such approvals, consents or waivers
as are required in terms of the Listings Requirements
of the JSE with respect to the Offer; and
5.3.1.5.2 the Financial Surveillance Department of the South
African Reserve Bank and the Reserve Bank of India
granting such approvals, consents or waivers as are
required with respect to the Offer, either
unconditionally, or subject to conditions acceptable
to the Offeror acting reasonably and in good faith;
5.3.1.6 no Material Adverse Event (as defined in paragraph 8.4 below)
having occurred by the date on which all Scheme Conditions
Precedent (other than the Scheme Condition Precent in this
paragraph 5.3.1.6, paragraph 5.3.1.7 and paragraph 5.3.1.8) have
been fulfilled or waived, if applicable ;
5.3.1.7 neither Party (and in the context of the Company or any material
member of the Company group and in the case of the Offeror, any
major subsidiary (as such term is defined in the JSE Listings
Requirements)) is the subject of an Insolvency Event (as will be
-3-
defined in the Scheme Circular), by the date on which the Scheme
Conditions Precedent in paragraph 5.3.1.6 has been fulfilled or
waived, in which case this Scheme Condition Precedent shall be
deemed to have been fulfilled;
5.3.1.8 it has not become illegal under South African law to implement all or
a material part of the Offer, by the date on which the Scheme
Conditions Precedent in paragraph 5.3.1.6 has been fulfilled or
waived, in which case this Scheme Condition Precedent shall be
deemed to have been fulfilled;
5.3.1.9 the Adcock Ingram Independent Board does not withdraw, modify or
qualify its recommendation of the Offer to the Adcock Ingram
Shareholders or its view regarding the fairness or reasonableness (or
otherwise) of the Per Share Scheme Consideration;
5.3.1.10 the Adcock Ingram Independent Board does not approve or
recommend a Superior Competing Proposal (as will be defined in the
Scheme Circular), whether conditionally and whether or not that
approval or recommendation is legally binding on the Company; and
5.3.1.11 no Superior Competing Proposal (as will be defined in the Scheme
Circular) has been completed.
5.3.2 Save as may be inconsistent with the Company's rights or obligations in relation
to a Competing Proposal, each of the Company and the Offeror shall use its
reasonable endeavours to procure the fulfilment of the Scheme Conditions
Precedent as soon as reasonably practicable.
5.3.3 The Offeror shall be entitled, in its sole and exclusive discretion, by notice in
writing delivered to the Company, to waive, in part or in whole, the Scheme
Conditions Precedents in paragraph 5.3.1.1 and paragraph 5.3.1.6). Neither the
Company nor the Offeror shall be entitled to waive any other Scheme Condition
Precedent unless that waiver is agreed to in writing by the Company and the
Offeror and is permissible in law.
5.4 Treatment of Share Incentive Schemes
Adcock Ingram has two equity-settled long-term share incentive schemes in place, being: (i)
an employee share option scheme established in 2008 pursuant to which eligible employees
were granted options from time to time which are convertible into Ordinary Shares in
accordance with the provisions of the trust deed of the Adcock Ingram Holdings Limited
Employee Share Trust (2008) ("Option Scheme"); and (ii) the Adcock Ingram Holdings
Limited Performance-Based Long-term Share Incentive Scheme (as approved by the Ordinary
Shareholders of the Company on or about 22 November 2018) ("PBLTIS"), in terms of which
participants are granted awards which vest subject to the achievement of relevant
performance criteria. The Implementation Agreement provides for the treatment of these
schemes as follows: -
5.4.1 in respect of the Option Scheme, the sole remaining participant shall receive a
net cash amount (being the difference between the strike price of their options
and the Per Scheme Share Consideration) less any employee taxes and in return
will agree to the cancellation of their options; and
5.4.2 in respect of the PBLTIS:
5.4.2.1 certain awards are due to vest prior to the anticipated Scheme
Implementation Date and a portion of the awards which are due to
vest in September 2026 (which will subject to accelerated vesting) will
be cash-settled; and
5.4.2.2 in respect of the remainder of the unvested PBLTIS awards, a
replacement scheme will be adopted in order to ensure that the
participants in the PBLTIS are in no worse position than prior to the
implementation of the Offer.
Further details in respect of treatment of the Option Scheme and the PBLTIS will be set out in
the Scheme Circular.
5.5 Delisting of the Ordinary Shares
Upon implementation of the Scheme, the Ordinary Shares will be delisted from the JSE.
6. COMPLIANCE CERTIFICATE
The Offer shall not be implemented unless the TRP has issued a compliance certificate with respect
to the Offer in terms of section 121(b) of the Companies Act.
7. FUNDING OF THE CONSIDERATION AND CONFIRMATION OF FINANCIAL RESOURCES
7.1 The Per Share Scheme Consideration will be funded by the Offeror from cash resources.
7.2 In accordance with Regulation 111(4) and Regulation 111(5) of the Takeover Regulations,
Investec Bank Limited ("Investec") on behalf of the Offeror has provided an irrevocable bank
guarantee to the TRP (in a form approved by the TRP) and for the benefit of the Adcock
Ingram Shareholders, in which Investec has agreed to pay up to a maximum guaranteed
amount of ZAR4,000,000,000 (four billion Rand) in the event that the Offeror fails to discharge
its obligation to make payment of all monies due under the Offer and in connection with the
treatment of the relevant share incentive schemes by the due date for payment.
8. SALIENT TERMS OF THE IMPLEMENTATION AGREEMENT
8.1 Non-Solicitation by the Company
In terms of the Implementation Agreement, the Company has provided certain non-solicitation
undertakings relating to Competing Proposals (as will be defined in the Scheme Circular) to
the Offeror that are appropriate for a transaction of the nature of the Offer. Further details of
these undertakings will be included in the Scheme Circular.
8.2 Business Operations
The Company has provided certain undertakings relating to the Company's: (i) capital
structure, securities and declaration of dividends; (ii) debt/financial arrangements; (iii)
executive/employees; and (iv) key operational matters, to the Offeror regarding the continuing
conduct of its business in the ordinary course, that are appropriate for a transaction of this
nature for the duration of the Exclusivity Period (as defined below in paragraph 8.3). Further
details of these undertakings will be included in the Scheme Circular.
8.3 Exclusivity
The Company and the Offeror have agreed to an exclusivity period being the period
commencing on the Implementation Agreement signature date and expiring on the day
following the earliest of the following dates:
8.3.1 the date of completion of the Scheme; and
8.3.2 the date on which the Implementation Agreement is terminated in accordance
with its terms;
provided that in no circumstances shall the date be later than Longstop Date ("Exclusivity
Period").
8.4 Material Adverse Event
For purposes of the above the Scheme Condition Precedent in paragraph 5.3.1.6 and as
defined in the Implementation Agreement:
8.4.1 a "Material Adverse Event" means an adverse event, effect, fact or
circumstance which has arisen or occurred or might reasonably be expected to
arise or occur ("Event") (alone or together with any other such action or potential
adverse event, effect, fact and/or circumstance), and which is material and
adverse with regard to the business, condition (financial, trading or otherwise),
assets, liabilities, operations, financial performance, and/or net income of the
Company and/or any member of the Company group (whether as a consequence
of the Scheme or not), which will or could reasonably be expected to materially
reduce the actual value of the Company group as set out further below but
excluding the impact of any Excluded Event. To be "material", an Event must
give rise to one or more of the following:
8.4.1.1 the Net Asset Value (as will be defined in the Scheme Circular) of the
Company measured at any time following the Event is reasonably
likely to be 10% (ten percent) lower than the Reference Net Asset
Value (as will be defined in the Scheme Circular);
8.4.1.2 the EBITDA (as will be defined in the Scheme Circular) of the
Company measured for the rolling period of 12 (twelve) months
immediately following the Event is reasonably likely to be 20% (twenty
percent) lower than the Reference EBITDA (as will be defined in the
Scheme Circular); or
8.4.1.3 the Net Debt (as will be defined in the Scheme Circular) of the
Company measured at any time following the Event, is reasonably
likely to exceed the Reference Net Debt (as will be defined in the
Scheme Circular) by an amount equal to 150% (one hundred and fifty
percent) of the Reference EBITDA; and
an "Excluded Event" means any one or more of the following:
8.4.2.1 the entering into, compliance with or implementation of the
Implementation Agreement and/or the other offer documents;
8.4.2.2 any act or omission of any member of the Company group done or
not done in the ordinary course of business or otherwise at the written
request or with the written consent of Natco Pharma; or
8.4.2.3 the effect of any change in:
8.4.2.3.1 general economic conditions, credit markets, capital
markets, macroeconomic factors or interest rates;
8.4.2.3.2 financial, banking or securities markets (including any
disruption thereof and any decline in the price of any
security or any market index);
8.4.2.3.3 applicable laws; and/or
8.4.2.3.4 changes after the signature date of the Implementation
Agreement to accounting practices which are included
in the accounting principles or any interpretation
thereof,
which are known or have already occurred as at the signature date of
the Implementation Agreement, and have a reasonably foreseeable
effect on the Company group, except to the extent that the same has
a disproportionate adverse effect on the Company group, taken as a
whole, relative to the adverse effect it has on other companies
operating in the same industries as the Company group;
8.4.2.4 any acts of God, natural disasters, terrorism, civil unrest, riots, armed
hostilities, war, sabotage or insurrection or any similar event which are
known or have already occurred as at the signature date of the
Implementation Agreement and which have a reasonably foreseeable
effect on the Company group, except to the extent that the same has
a disproportionate adverse effect on the Company group, taken as a
whole, relative to the adverse effect it has on other companies
operating in the same industries as the Company group; or
8.4.2.5 any matter Fairly Disclosed (as will be defined in the Scheme
Circular).
8.5 Warranties and representations
The Company and the Offeror have provided warranties and representations to one another
regarding their respective capacity and authority to enter into and perform under the
Implementation Agreement.
9. SHAREHOLDING OF THE OFFEROR AND ITS ASSOCIATES IN THE COMPANY
9.1 The Offeror holds 1,284,680 Ordinary Shares, representing approximately 0.9% of the
Ordinary Shares (excluding treasury shares).
9.2 The Offeror has not had any dealings in the Ordinary Shares during the six-month period prior
to the date of signature of the Implementation Agreement.
9.3 None of the Offeror's directors have a beneficial interest in the Ordinary Shares.
9.4 None of the Offeror's directors have had any dealings in the Ordinary Shares during the six-
month period prior to the date of signature of the Implementation Agreement.
10. APPOINTMENT OF INDEPENDENT EXPERT
The Company has appointed BDO Corporate Finance Proprietary Limited (the "Independent Expert")
to act as independent expert in accordance with the requirements of the Takeover Regulations to
advise the Adcock Ingram Independent Board and report on the Offer by way of a fair and reasonable
opinion. The Independent Expert's report will be included in the Scheme Circular to be issued to the
Ordinary Shareholders. The Independent Expert's report has been provided to the Adcock Ingram
Independent Board and the report confirms that the Per Share Scheme Consideration is fair and
reasonable.
11. VIEWS AND RECOMMENDATION OF THE INDEPENDENT BOARD ON THE SCHEME
11.1 The Adcock Ingram Independent Board, after due consideration of the report of the
Independent Expert, and the requirements of Regulation 110, has considered the terms and
conditions of the Scheme, and has resolved that the terms and conditions thereof are fair and
reasonable to the Adcock Ingram Shareholders and, accordingly, recommend that the Adcock
Ingram Shareholders vote in favour of the Scheme at the General Meeting.
11.2 As at the date of this Firm Intention Announcement, the Independent Board has not received
any firm intention offers, other than the Offer set out above.
12. WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT
Pursuant to the release of this announcement, Adcock Ingram Shareholders are advised that caution
is no longer required to be exercised when dealing in their Ordinary Shares.
13. RESPONSIBILITY STATEMENTS
13.1 The Adcock Ingram Board and Adcock Ingram Independent Board collectively and individually
accepts responsibility for the information contained in this announcement insofar as it relates
to the Company, and certifies that, to the best of its knowledge and belief, such information
contained herein is true and nothing has been omitted which is likely to affect the import of
such information.
13.2 Natco Pharma accepts responsibility for the information contained in this announcement
insofar as it relates to Natco Pharma, and certifies that, to the best of its knowledge and belief,
the information contained in this announcement relating to the Offeror is true and nothing has
been omitted which is likely to affect the importance of such information.
14. DOCUMENTATION
14.1 The Scheme Circular, which is to be issued jointly by Adcock Ingram and Natco Pharma
detailing the Offer and containing full terms and conditions of the Scheme and including the
notice to convene the General Meeting to consider, and if appropriate, approve the Scheme
Resolution, is in the process of being prepared.
14.2 The Scheme Circular will further include the Independent Expert report, the opinion and
recommendation of the Adcock Ingram Independent Board.
A further announcement relating to the distribution of the Scheme Circular, including the salient dates and
times pertaining to the Scheme will be published on SENS in due course.
Adcock Ingram Shareholders are advised that an investor press conference will be held at 14h00 (SAST),
which can be accessed on the Adcock Ingram website at
https://themediaframe.com/mediaframe/webcast.html?webcastid=SIy7Z8Gs, for further details regarding the
Offer.
Midrand
23 July 2025
JSE Equity Sponsor to the Company
Rand Merchant Bank (A division of FirstRand Bank Limited)
Financial Advisor to the Company
Goldman Sachs International
Legal Advisor to the Company
Edward Nathan Sonnenbergs Inc
Independent Expert
BDO Corporate Finance Proprietary Limited
Financial Advisor to the Offeror
Investec Bank Limited
Legal Advisor to the Offeror
Bowmans
Legal Advisor to Bidvest
Alchemy Law
Date: 23-07-2025 12:30:00
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,
information disseminated through SENS. |
|
