NATCO Pharma offers to acquire stake in South African Adcock Ingram Holdings

NATCO Pharma has submitted a firm intention offer to Adcock Ingram Holdings, South African pharmaceutical company, for a cash offer of R75.00 ($ 4.27)  per share (exchange rate mentioned below). Should the offer be accepted, NATCO Pharma will hold a 35.75 per cent stake in Adcock Ingram, valued at R4 billion ($ 226 million). Adcock Ingram is estimated at a valuation of R11 billion (~ $ 632 million). 

It is envisaged that post-acquisition, Adcock Ingram will continue to operate as a private South African business, supported by two substantial strategic shareholders, Bidvest at 64.25 per cent and NATCO at 35.75 per cent, including prior holding stake. Adcock Ingram generated revenue of R9.6 billion ($ 536 million*) in the financial year June’24 and delivered a gross margin of 33.4 per cent. The company achieved EBITDA of R1.4 billion ($ 78 million*) at a margin of 14.6 per cent, and a profit after tax of R814 million ($45 million*). 

Following the past year’s performance, the company delivered revenue of R4.7 billion ($262 million*) for the period ending December’24 and achieved EBITDA and profit after tax of R677 million ($38 million*) and R389 million (US$22 million), respectively. Post-transaction, NATCO will consolidate 35.75 per cent of Adcock Ingram’s net profits in NATCO’s financial results in accordance with its shareholding. NATCO can potentially bring significant value through its research and development programmes, dossier approvals, intellectual property (IP) sharing, experience in regulated market operations, sourcing and global marketing for the new markets in Africa and regulated markets in the region. 

For Adcock Ingram, this transaction is expected to bolster its already substantial local market share, cost competitiveness and provide the company with significant opportunities for new product and geographic expansion. The estimated transaction completion time is 4 months, assuming no regulatory delays. The offer is underpinned by the recommendation of the Offer by an independent Board of directors of Adcock Ingram and a Fair and Reasonable Value opinion based on an independent expert valuation by BDO. The Board of Directors of NATCO have also approved the transaction. Business operations will remain uninterrupted, with no changes to existing partnerships, joint ventures, or supplier relationships. Adcock Ingram will be delisted from the JSE if the transaction proceeds.

 Exchange rate: 1 USD = 17.54 ZAR (Transaction figures) 

*Exchange rate: 1 USD = 18 ZAR; 1 USD = 86 INR (Historical figures)