GlaxoSmithKline (GSK) announced a voluntary open offer to increase its stake in its publicly-listed pharmaceuticals subsidiary in India (GlaxoSmithKline Pharmaceuticals) from 50.7 per cent to up to 75 per cent at a price of Rs 3,100 per share. Securities regulations in India require a minimum public shareholding of 25 per cent for a company to maintain a public listing in the country. GSK intends to keep the company publicly-listed.
The offer, which is made pursuant to the rules of the Securities and Exchange Board of India (SEBI), is to acquire up to 20,609,774 shares, representing 24.3 per cent of the total outstanding shares of the Indian company. The offer represents a premium of approximately 26 per cent to the company’s closing share price on the National Stock Exchange of India (NSE) on December 13, 2013. This closing price represents an appreciation of 19 per cent over the last 12 months. The potential total value of the transaction at the offer price is approximately Rs 64 billion or £629 million.
David Redfern, Chief Strategy Officer, GSK said, “For GSK this transaction will increase exposure to a strategically important market and for our Indian pharma subsidiary’s shareholders we believe it offers a good liquidity opportunity at an attractive premium. GSK has a proud heritage in India. 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.”
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.
Subject to regulatory clearance, the offer period is expected to begin in February 2014. Payment for the shares will take place shortly after close of the offer. The company’s shares are traded on the Bombay Stock Exchange and the NSE.
EP News Bureau- Mumbai