| Mon 4 May 2009, 15:39 | | CMP - Cipla Medpro South Africa Limited - An update on the unsolicited potential |
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CMP
CMP
CMP - Cipla Medpro South Africa Limited - An update on the unsolicited potential
offer by Adcock
CIPLA MEDPRO SOUTH AFRICA LIMITED
(formerly Enaleni Pharmaceuticals Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2002/018027/06)
(ISIN Number: ZAE000128179 Share Code: CMP)
("Cipla Medpro" or "the Company")
AN UPDATE ON THE UNSOLICITED POTENTIAL OFFER BY ADCOCK
Shareholders are referred to the Cipla Medpro announcement on Friday 17 April
2009 and the announcement made by Adcock Ingram Holdings Limited ("Adcock") on
24 April 2009 ("Adcock`s update announcement") regarding Adcock`s unsolicited
firm intention to make an offer for the entire issued share capital of the
Company, subject to the fulfilment of extensive suspensive conditions ("the
Potential Offer").
The Board of Cipla Medpro ("the Board") is cognisant of its obligations to
prevent a false market in Cipla Medpro shares and hereby provides shareholders
with an update on pertinent matters.
1 Unequivocal rejection letter from Cipla Limited ("Cipla India") to Adcock
Shareholders are aware of the suspensive condition in the Potential Offer
which provides for Adcock receiving written confirmation from Cipla India
that the supply agreement will continue, on no less favourable terms, until
September 2025. The condition provides further that the implementation of
the Potential Offer will not trigger any rights in the hands of Cipla India
or the Company.
The relationship between the Company and Cipla India is crucial to the
future commercial success of the Company, providing a continued pipeline of
dossiers, and establishing a platform for the continued growth of the
Company. Accordingly, a transaction or development which could result in
the termination of this relationship or lead to a material alteration of
the existing agreement between the Company and Cipla India would not be in
the best interests of the Company or its shareholders.
The Company is in the possession of a copy of a letter dated 21 April 2009
addressed to Dr J Louw (Chief Executive Officer ("CEO") of Adcock) by Mr A
Lulla (CEO of Cipla India). A relevant extract from that letter is set out
below:
"This letter serves to advise you that we, (sic) Cipla India Board,
will not support your bid to purchase Cipla Medpro SA Ltd now or at
any time in the future.
Firstly, Adcock Ingram is associated with companies in competition
with ourselves.
Secondly, in my view there is no compelling case to merge the two
companies. I have known the people at CMSA for as long as 14 years.
They are hard working, committed, passionate and totally non
corporate. They have been loyal partners and friends and we see no
reason whatsoever to change what has worked for both of us.
Thirdly, I once again, remind you that Cipla India will take whatever
steps necessary to protect our reputation and rights according to the
intent of the manufacturing Agreement."
This letter confirms previous communications between Cipla India and the
Company, the content of which had been conveyed to Adcock in various
interactions including in a response to Acock`s initial expression of
interest received by the Company in November 2008.
2 Uncertainty regarding the `irrevocable` undertakings given by certain
shareholders
The Adcock update announcement makes it clear that shareholders that have
provided these undertakings are free to trade in the shares that they hold
in Cipla Medpro at any time. Allowing a party giving the undertaking to be
able to freely trade its shares significantly weakens the undertaking.
Given that Adcock`s proposed end date for the implementation of the
Potential Offer is 31 December 2009 (which it can unilaterally extend), the
actual level of support may not remain the same in the ensuing months.
The Board feels that it is necessary to caution shareholders in drawing
conclusions on the possible outcome of the Potential Offer given the
inherent uncertainty of these undertakings and that Adcock will only
provide the market with updates on the trading of the respective
institutions on a monthly basis commencing in June. There is no certainty
of the level of support Adcock may receive in terms of these written
undertakings until the Potential Offer is implemented.
Shareholders should also bear in mind that it has been made public, through
various announcements and press articles that shareholders holding in
excess of 29% of the issued share capital of the Company, including Sweet
Sensation 67 (Pty) Ltd ("Sweet Sensation") (which holds 18.49% of the
issued share capital of the Company), are not supportive of the Potential
Offer.
3 BEE partner`s vision for the future of the Company
In 2006 the Company entered into a Black Economic Empowerment transaction
with Sweet Sensation. The Company is firmly of the view that its BEE
partners are an integral component of its ongoing strategy and future
success. It is accordingly of concern that the Potential Offer does not
take the interests of the BEE shareholders into consideration and thereby
threatens the future of the Company.
Sweet Sensation has reaffirmed to the Board its utmost confidence in the
current management of Cipla Medpro and the strategic relationship with
Cipla India. Sweet Sensation firmly believes that the Potential Offer is
unlikely to deliver the performance and returns to shareholders that could
be achieved through an independent Cipla Medpro in partnership with Cipla
India, with current management in place. As such, Sweet Sensation is not
supportive of the Potential Offer as value would be eroded for the
shareholders.
4 Establishment of an independent sub-committee and further consideration of
the Potential Offer
The Board has established an independent subcommittee to assist in
considering the advice it is in the process of obtaining. The members of
the independent subcommittee, with summarised curriculum vitae, are set out
below:
Dr. Gilimamba (Gil) Mahlati (current independent non-executive director):
Gil is a graduate from the University of Natal Medical School (1981),
a fellow of the College of Surgeons of SA (1994) from the University
of Cape Town and a Clinical Fellow in Liver Surgery at Kings College
Hospital, London as well as a respected business and healthcare
consultant, who has considerable experience and knowledge in the
pharmaceutical industry.
Advocate Gary Walters (co-opted independent non-executive):
Gary is an advocate practising as a member of the Cape Bar (1994).
Prior thereto he practised as a commercial attorney with a leading
Cape Town firm (1990 - 1994). He specialises in commercial litigation
and has extensive experience in the field of pharmaceutical/medicine
related litigation.
Johann Pieterse (co-opted independent non-executive):
Johann is a Chartered Accountant (1975) and holds a M Compt from UNISA
(1978). He was the financial director of Pepkor and the Chief
Executive Officer of Teljoy, which was ultimately sold to Vodacom.
Thereafter he acted as Managing Director of Vodacom`s Service Provider
Company. Johann then joined turnaround specialist company Strategy
Partners and was appointed Executive Chairman in 2003.
The advice being considered by the Board and the independent sub-committee
relates to the terms of the Proposed Offer and Adcock`s request to propose
a Scheme of Arrangement in terms of s311 of the Companies Act, Act 61 of
1973. The Board will share this advice and its own view with shareholders
in due course.
Shareholders are reminded to continue to exercise caution in dealing in the
Company`s securities until a further announcement has been made.
The Board, individually and collectively, accept responsibility for the
information contained in this announcement and certify that to the best of
their knowledge and belief, the information contained in this announcement is
in accordance with the facts and does not omit anything likely to affect the
import of such information.
Cape Town
4 May 2009
Investment Bank, Corporate Advisor and Sponsor
Nedbank Capital
Corporate Law Advisors
Taback and Associates (Pty) Ltd
Independent Financial Advisors
PriceWaterhouseCoopers Corporate Finance (Proprietary) Limited
Communications Advisors
College Hill Associates
Date: 04/05/2009 15:39:01 Produced by the JSE SENS Department.
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