Chile's CFR Pharmaceuticals on Friday made a firm and binding offer to acquire 100% of the issued share capital of JSE-listed Adcock Ingram for R12.6-billion, after the boards of the two companies unanimously approved the agreement.

Speaking at a media conference on the transaction on Friday, Adcock Ingram chairperson Dr Khotso Mokhele said the transaction would now be subject to shareholder vote and regulatory approvals.

Of the overall purchase consideration, R8.1-billion would be a cash settlement, while the balance would be settled in CFR shares.

“We are delighted to announce a firm and binding offer for Adcock Ingram. Together, we have the opportunity to create a world-class, pan-emerging markets pharmaceuticals business delivering a long-term future and significant benefits for all South African stakeholders,” CFR CEO Alejandro Weinstein said.

He added that the rationale for the proposed combination had been accepted by the overwhelming majority of all stakeholders, which was reflected in the outstanding level of shareholder support received to date.

The newly combined company would be listed on the Santiago Stock Exchange and the JSE, thus enhancing South Africa’s reputation as a global investment destination, the two companies said in a joint statement. 

Mokhele said Adcock Ingram’s board had overseen a rigorous, eight-month process through which it had thoroughly evaluated all its options to ensure that it maximised value for shareholders and all other stakeholders.

“We are unanimous in our view that CFR remains the most compelling option on all counts – from the offer price, strategic rationale and ability to execute, through to the creation of a unique emerging markets pharmaceuticals player,” he said. 

He added that the company was pleased with the support it had received from a substantial number of its shareholders, including its black economic-empowerment shareholders and key multinational partners.

“This [transaction] presents a ‘win win’ for all stakeholders. This signature transaction will not only benefit our shareholders, but also our employees and customers and, ultimately, patients and South Africa at large. It will support our national strategic objectives in areas such as skills transfer, exports and jobs. It would implement much of what the National Development Plan argues is required for South Africa’s successful future,” Mokhele said. 

Meanwhile, the companies pointed out that the transaction would represent about 65% of the net foreign direct investment of $1.9-billion that South Africa averaged between 1994 and 2012, taking South Africa closer to the $5-billion to $10-billion that Goldman Sachs’ recently published 'Two Decades of Freedom' report recommended South Africa needed to fund its current account deficit.