Alongside CIH, they get Adcock stake they wanted

Bidvest, Adcock and CFR, it is not that complicated anymore. OK, is the Bidvest slash CIH consortium reaching their goal of getting 34.5 percent of the shareholders of Adcock agreeing to sell to them, rather than the Chileans in the form of CFR Pharmaceuticals another dose of Brian Joffe brilliance, or sensible shareholders in the end? Possibly all of those things, Joffe has been at the helm of Bidvest since he founded the business in 1988. When you hear Brian Joffe talk, he sounds more like a doer rather than someone who attended the finest colleges and has a hot potato in his mouth. A straight talker, not afraid of prickly conversation, when it comes to decisions around businesses. It is simply business, that is all that it is. And he saw an opportunity here, thinks that his business, Bidvest and CIH (Community Investment Holdings) can do a better job than the current management crop at Adcock Ingram.


So, the Chileans have spent a large amount of money in trying to achieve their goal, but unfortunately for them they did not have the deep pockets that Bidvest and CIH have. That was always the problem. And the PIC to their credit, who were also acquiring shares in December decided that they were opposed to this deal from the start. Together, Bidvest and CIH hold 34.5 and the PIC, from the December 24th announcement hold 22.373 percent of the business AND Foord also held 15.02 percent from the 27 December 2013 SENS release.


Although, they (Foord) might have been sellers to the CIH Bidvest consortium, that part I would not be sure of. But there you go, proof that shareholders are more powerful than the management team. Managers are placed there to fulfil the wishes of the shareholders, they are after all the folks who have more to lose. Your shareholding value could go to zero, but managers can find a new job. That is why it has become increasingly critical to offer the best quality management incentives to be alongside the company, by directing a large portion of their remuneration in equity.


I would be more excited to see more of that, with longer dated lock ins. But I am not in that world, the corporate world is cut throat. But that is great for shareholders, capitalism is by far the best way economic system. Economic prosperity particularly when coupled with democracy. Conversely the most toxic mix is a dictatorship and communism. The most simple example is North and South Korea with their divergent economic paths 60 years on from the line drawn in the sand after the war.

Except that they are always at loggerheads with one another. For more on the two, check out a recent comparison: South v North Korea: how do the two countries compare? Visualised Sies. If one geopolitical hotspot area could change in my lifetime, this one would be my wish.


But this struggle for the control of Adcock and their management (and future direction) is a different story entirely, we have capitalism at work here. Those with the resources are flexing their muscles.


So what now? According to the Adcock website, their senior managers have 90 years of industry experience and have been with the company for 45 years. 10 years industry experience and 5 years with the business, that sounds like a lot less when you look at it like that. When I look at the board of many listed companies, the members have a wealth of experience. They have amazing qualifications, they are good quality people with a wealth of experience. What happened Friday at the AGM however is that Andrew Thompson (who earned 660 thousand ZAR as a non-exec last year) was not re-elected as anything, including as part of the audit committee. And now, only 2 people have been elected to the audit committee.


I suspect that this is a missile fired at the board saying that the shareholders think that they are overpaid and under-deliver. First step. Next step will no doubt be another management reshuffle. What now for Jonathan Louw and Andrew Hall? We wait and see.