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Cipla offers over Rs 1,200 cr to acquire 51% in Cipla Medpro

Cipla Medpro is a distributor of the Indian firm's products in South Africa and certain neighbouring markets.

twitter-logoPTI | November 22, 2012 | Updated 00:30 IST

Drug firm Cipla on Wednesday said it has made an offer of about $220 million (over Rs 1,200 crore) to acquire 51 per cent stake in South African firm Cipla Medpro.

In a filing to the BSE, Cipla said it is "in preliminary discussions and has made an indicative proposal in relation to the acquisition of an approximately 51 per cent stake in Cipla Medpro South Africa Ltd".

The company has offered a rate of 8.55 rand per share, it added.

Shares of Cipla on Wednesday jumped 2.61 per cent to close at Rs 389.70 apiece on the BSE, becoming the biggest gainer among 30 Sensex stocks.

"Based on Cipla Medpro's current shares outstanding and sport ZAR/USD exchange rates, total consideration payable by the company would be approximately $220 million (exclusive of the anticipated dividend of up to ZAR 0.10 per share to be paid by Cipla Medpro to its shareholders for the 2012 financial year)," the company said.

Stating that the ongoing discussions are subject to various conditions, Cipla further said: "At this stage, there is no certainty that these discussions will lead to a firm offer being made or a transaction being consummated."

Cipla Medpro is a distributor of the Indian firm's products in South Africa and certain neighbouring markets.

Last month, Cipla Medpro had said its Chief Executive Jerome Smith has resigned citing "an irretrievable breakdown in the working relationship with the Board and alleging that he was forced to resign. He also indicated that he would institute legal action to claim damages..."

Smith had established Medpro Pharmaceutica in 1993 - one of the country's South Africa's first generic medicine firms as the industry opened up in South Africa. It became one of the top three after Smith tied up a deal with India's largest generic medicines manufacturer, Cipla.

Following Smith's exit, some analysts felt that it would negatively impact Cipla Medpro, but Chairman Sibusiso Luthuli had said the agreement with its Indian supplier, which had no stake in the South African company, would not be affected.

Cipla Medpro and Cipla were at the centre of a controversy in 2009 regarding the 20-year pipeline agreement between them when South African drugs manufacturer Adcock Ingram launched a hostile takeover bid for Cipla Medpro.

Adcock Ingram had later shelved its plans to acquire Cipla Medpro, largely based on the threat by Cipla to terminate the 20-year exclusivity agreement if there was a change in its management.

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