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Johannesburg - Diversified industrials firm Bidvest [JSE:BVT] significantly overpaid for its shareholding in South Africa’s second-biggest drug maker Adcock Ingram [JSE:AIP], CEO Brian Joffe admitted.
This has prompted Bidvest to write down its investment in Adcock Ingram to a level in line with a realistic market valuation, Joffe said in the group's annual report on Thursday evening, adding the write-down involves about R1bn.
Bidvest acquired an additional 44.5 million shares in Adcock Ingram for R3.2bn in January last year.
This brought its total effective economic interest to about 30%, which was approved by competition authorities.
“(However) at the time of our offer, we were firmly of the belief that we were paying a fair price. All information available to us in the public domain indicated our offer was reasonable. This proved not to be the case,” Joffe is quoted as saying in the annual report.
“Our reliance on publicly available information is a mitigating factor. However, management must take responsibility for paying a price that, with the benefit of hindsight, was clearly excessive,” he added.
Bidvest went after Adcock Ingram because it would create a platform for long-term growth.
READ: Bidvest yet to decide on Adcock offer
“For example, its over-the-counter portfolio could well become the core element in a significantly expanded product offering,” Joffe said.
Bidvest, with its background in distribution, trading and services, can add considerable value to the board going forward.
This has prompted Bidvest to write down its investment in Adcock Ingram to a level in line with a realistic market valuation, Joffe said in the group's annual report on Thursday evening, adding the write-down involves about R1bn.
Bidvest acquired an additional 44.5 million shares in Adcock Ingram for R3.2bn in January last year.
This brought its total effective economic interest to about 30%, which was approved by competition authorities.
“(However) at the time of our offer, we were firmly of the belief that we were paying a fair price. All information available to us in the public domain indicated our offer was reasonable. This proved not to be the case,” Joffe is quoted as saying in the annual report.
“Our reliance on publicly available information is a mitigating factor. However, management must take responsibility for paying a price that, with the benefit of hindsight, was clearly excessive,” he added.
Bidvest went after Adcock Ingram because it would create a platform for long-term growth.
READ: Bidvest yet to decide on Adcock offer
“For example, its over-the-counter portfolio could well become the core element in a significantly expanded product offering,” Joffe said.
Bidvest, with its background in distribution, trading and services, can add considerable value to the board going forward.
