Drugmaker Cipla Ltd said on Thursday it has increased the offer price for shares it doesn’t own in Cipla Medpro South Africa Ltd to 10 rands for a total consideration of about $512 million, the company said in a release.
That’s up from the 8.55 rand offer made for shares in South Africa’s third largest drugmaker in November, which had been opposed by stakeholders. The fresh offer will be implemented through a scheme of arrangement and is subject to regulatory and other approvals including that of Medpro shareholders.
Medpro’s board will recommend to shareholders that they approve the scheme. The proposed acquisition will be made either directly by Cipla or by a subsidiary nominated by it and will be funded largely through internal accruals. Other alternatives will also be considered, if required.
“South Africa is an attractive emerging market with strong projected growth for generic drugs of approximately 14% per year for the next several years,” Cipla’s chief executive officer Subhanu Saxena said in Thursday’s release.
This investment is in line with Cipla’s strategy to ascend the value chain by managing a front-end sales force in a market outside India. Cipla and Medpro have a two-decade relationship.
The deal enables Cipla to strengthen Medpro’s position in the South African pharmaceutical market, support the optimization of Medpro’s manufacturing capability and support Medpro’s expansion into collaboratively identified African markets, he added.
Shares of Cipla closed 0.96% lower at Rs.360.75 on BSE on Thursday, while the Sensex dropped 1.52% to 18,861.54 points.