Shareholders urged to be cautious during Cipla Quality Chemicals transition

In a notice from Cipla yesterday, shareholders were asked to be cautious when dealing with the company shares citing that if the buyer, Africa Capitalworks SSA, is approved it will significantly 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 reads in part.

Ajay Pal, the Cipla Quality Chemical chief executive officer, said that Cipla is a fortified business with an expanding market and regardless of the outcome of the transaction, it will not suffer any major changes.

“This is more of a special transaction, not a takeover. We shall give more details once Capital Markets Authority and Uganda Securities Exchange approve the sale of shares,” he said.

Buyout

The Indian pharmaceutical company Cipla is expected to exit Cipla Quality Chemical Industries Uganda for a sum between Shs93.3 billion and Shs112 billion.

The company entered an agreement with the buyer Africa Capitalworks SSA, a South African-based equity fund, on March 14, 2023, to sell off its stake in Cipla Quality Chemical Industries Uganda through Cipla (EU) and Meditab Holdings by March 31, 2023.

“… 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 SSA on [March 14] 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 reads.

As of March 31, 2022, Cipla Quality Chemical has a total net worth of Shs164.6 billion and generated Shs280.9 billion in revenue. This contributed 1.62 percent of the net worth of Cipla Limited and 2.57 percent of Cipla Limited's revenue, respectively.

Africa Capitalworks SSA, which is owned by Africa Capitalworks Holdings, Mauritius, is expected to have a stake of 62.91 percent in the company.

Shareholding

Currently, the founders of Quality Chemical Industries Uganda, Emmanuel Katongole, Frederick Kitaka Mutebi, and George Baguma hold a 2.78 percent stake each in the company.

Meditab is the largest shareholder with a 51.05 percent stake, followed by individual shareholders (18 percent), Capitalworks SSA (11.15 percent) and TLG Capital (Amistad) with 11.5 percent, Government Employees Pension Fund (8.54 percent), NSSF (7.38 percent), Cipla EU (0.13 percent) and Joseph Yiga (0.11 percent).