UK-headquartered multinational GlaxoSmithKline (GSK) has
announced a voluntary open offer to hike its stake in its Indian
pharmaceutical operations, GlaxoSmithKline Pharmaceuticals Ltd. (GSK
Pharma), from 50.7 per cent to 75 per cent at Rs. 3,100 per share.
A
statement from GSK said the offer is to acquire up to 20.6 million
shares, representing 24.3 per cent of the total outstanding shares of
the Indian company.
The offer price of Rs. 3,100 per
share represents a premium of about 26 per cent to the company’s
closing price on the National Stock Exchange (NSE) on December 13, 2013.
The potential value of the transaction at the offer price is about Rs.
6,400 crore ($1 billion or 629 million pounds). The transaction will be
funded through GSK’s existing cash resources, will be earnings neutral
for the first year and accretive thereafter and will not impact
expectations for the Group’s long-term share buyback programme, GSK said
in a statement.
GSK Pharma makes and distributes
pharmaceuticals and vaccines across multiple therapeutic areas . It
employs more than 5,000 people and reported a Rs. 2,600 crore-plus
turnover in calendar 2012. David Redfern, Chief Strategy Officer, GSK
said, “For GSK, this transaction will increase exposure to a
strategically important market and for our Indian pharmaceuticals
subsidiary’s shareholders, we believe it offers a good liquidity
opportunity at an attractive premium.”
“GSK has a
proud heritage in India,” said Mr. Redfern, adding, “Today’s
announcement is a further demonstration of our long-term commitment to
the country, having increased our holding in our consumer business
earlier this year and more recently committed to a significant
manufacturing investment.”
Gaurang Shah, VP –
Research, Geojit BNP Paribas Financial Services felt the offer price was
a very good one. “It reflects the confidence of the parent company in
the long-term India growth story. Even though the Indian pharmaceutical
market is fragmented, GSK has the multinational edge and a very strong
balance sheet.”
With this deal, GSK would spend
almost $2 billion in hiking its shareholding in its Indian subsidiaries
in the span of a year. In February 2013, GSK hiked its stake in its
other listed Indian subsidiary GSK Consumer Healthcare to 72.5 per cent
from 43 per cent at around Rs. 4,800 crore ($ 900 million). Exactly a
month ago, GSK said it would invest Rs. 864 crore in GSK Pharma’s
manufacturing facility. On the BSE, the shares of GSK Pharmaceuticals
scaled a 52-week high of Rs. 2,952 before closing up Rs. 459 (18.6 per
cent) at Rs. 2,927.4.
