What you need to know:
- Africa Capital Works, which is seeking to buyout Cipla from Quality Chemical Industries, says the expected transaction close date of May 31 could not be achieved thus requiring an extension
Africa Capitalworks has indicated that completion of the planned buy out of Cipla from Quality Chemical Industries was not achieved by May 31 as earlier planned.
In a notice yesterday, Africa Capital Works indicated that the buyout, which is expected to cost between $25m (Shs93.3b) and $30m (Shs112b), could not be completed within the planned timeline thus requiring a new transaction close date.
“[Africa Capitalworks] and Cipla Group have considered the time required to complete the outstanding conditions precedents and agreed to extend the date by which all conditions precedent must be satisfied by [or waived] for the transaction to close,” the notice issued by Africa Capitalworks, reads in part, noting that the transaction close date had been extended to June 31, with the possibility of an automatic extension to July 31.
The extension will delay the deal, in which the Indian-based drug manufacturer is seeking to dispose of its 51.18 percent stake in Cipla Quality Chemical Industries.
In a disclosure notice to shareholders filed through Bombay Stock Exchange, National Stock Exchange of India and Luxembourg Stock Exchange, Cipla indicated that it had on March 14 entered into an agreement with Africa Capitalworks, in which it would dispose of its entire stake in Cipla Quality Chemical Industries Uganda held through Cipla (EU), and Meditab Holdings.
“… the company [Cipla] and its wholly owned subsidiaries, Cipla (EU), UK and Meditab Holdings, Mauritius, have entered into a share purchase agreement with Africa Capitalworks for sale of 51.18 [percent] stake held in Cipla Quality Chemical, Uganda. Subsequent to the sale, Cipla Quality Chemical will cease to be a subsidiary of [Cipla],” the notice indicated.
The noticed had indicated that the sale would be completed by May 31.
A notice filed through Uganda Securities Exchange indicated that Africa Capitalworks had applied to Capital Markets Authority for approval of the transaction, which, if approved, would impact the company’s shareholding.
“This transaction, if approved, will lead to a change in the company’s shareholding structure. Shareholders and the public are hereby notified … and are advised to exercise caution when dealing in the shares of the company,” the notice indicated.
No details have been provided on the status of Cipla’s application for grant of sale through the Capital Markets Authority. Monitor could not readily establish why the planned sale had been delayed for at least another two months.