7 October 1999

Africa: Tiger Oats Bids For All

Johannesburg — Food group Tiger Oats has made a bid for the entire share capital of its subsidiary, pharmaceutical heavyweight Adcock Ingram, in a complex transaction worth R3,4bn.

The bid price is R21,60 for each Adcock ordinary and N share, which analysts say represents fair value at a premium of about 35% to the share price at the beginning of the month.

Adcock's failed bid for SA Druggists (SAD) earlier this year and its decision not to appeal against the Competition Board's prohibition sent the counter tumbling almost 19% to R23,50 in a day.

In a joint statement, the companies said the underperformance of Adcock N shares by 28% against the Johannesburg Stock Exchange industrial index in the past 12 months was due to "significant stock overhang" and the negative outcome of the SAD deal. The companies said their combined cash flows would offset the discount at which the market views Adcock, of which Tiger owned 45,6%. The share capital of Adcock, which would be delisted if the bid is accepted, was worth R6,2bn.

The acquisition is subject to approval by Tiger shareholders and the competition commission. Although Tiger owned less than half of the Adcock share capital, it had control through a voting pool agreement signed with the Premier group when Prempharm and Adcock merged.

Sponsoring broker ING Barings said the process should be complete by late November and the deal would not require bedding down since management and operations would remain separate.

The companies said Adcock would continue to operate as a separate unit within the group.

Adcock closed at R20,50, R2 higher than Tuesday's close.

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