Bloomberg News

Cipla Medpro Stock Slumps After Drugmaker Says Talks End

August 31, 2012

Cipla Medpro South Africa Ltd. (CMP), a generic drugmaker, rose the most in two years after it said allegations against Chief Executive Officer Jerome Smith won’t have a “financially material impact” on the company.

The stock climbed 7.3 percent to 7.10 rand at 1:25 p.m. in Johannesburg, the steepest intraday gain since Aug. 31, 2010. That pared its decline since the CEO was suspended on Aug. 15 to 14 percent.

“The share is very cheap, but there is still a lot of uncertainty, so it’s hard to know what you are getting for your money,” said Mathew Menezes, an analyst at Avior Research Ltd. in Johannesburg. “You can see this in the share volatility.”

Cipla trades at 9.2 times estimated 2012 earnings, while larger rival Aspen Pharmacare Holdings Ltd. (APN) trades at 22.21 times estimated profit.

Cipla said on Aug. 29 that unspecified talks were terminated after it suspending Smith. Cipla didn’t specify the nature of the allegations against the CEO. A hearing will start on Sept. 6.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net


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