LONDON (ShareCast) - Pharmaceuticals giant GlaxoSmithKline (Other OTC: GLAXF.PK - news) has announced a voluntary open offer to increase its holding in its publicly-listed Consumer Healthcare subsidiary in India.
The company also said it has come to an agreement on the terms of a proposal to increase its ownership in GlaxoSmithKline Consumer Nigeria, which manufactures, markets and distributes a wide range of Consumer Healthcare brands, to 80%.
Increasing stake in Indian subsidiary
GSK has made an offer to increase its stake in GlaxoSmithKline Consumer Healthcare from 43.2% to up to 75% at a price of INR 3,900 per share. This percentage would allow securities relations in India to maintain the minimum public shareholidng of 25% that enables the company to retain a public listing in the country.
GSK wants to acquire up to 13.39m shares, equal to 31.8% of the total outstanding shares, at a premium of about 28% to the closing price on Friday November 23rd. The total value of the transaction is potentialy £591m.
David Redfern, Chief Strategy Officer, GSK said: "GSK Consumer Healthcare is a well established business in India and its leading product, Horlicks, is an iconic household brand. This transaction represents a further step in GSK's strategy to invest in the world's fastest growing markets and, we believe, offers a liquidity opportunity at an attractive premium for existing shareholders."
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, it said.
Building stake in GlaxoSmithKline Consumer Nigeria
The group has agreed in principle to increase its stake in GlaxoSmithKline Consumer Nigeria from 46.4% to 80%, with the other 20% remaining a public shareholding, in line with the minimum requirement for a company to maintain a listing on the Nigerian Stock Exchange.
GSK will purchase around 321m shares in the company from public shareholders at an offer price of NGN 48 per share.
Approximately 70% of the company's revenue is from Consumer Healthcare Brands and 30% is from Pharmaceuticals and Vaccines.
The offer represents a premium of 28% to the company's closing share price on November (Xetra: A0Z24E - news) 23rd.
David Redfern, Chief Strategy Officer, GSK said: "This Proposal to increase GSK's ownership of GlaxoSmithKline Consumer Nigeria reiterates our long term support of the Company's strategy and our confidence in the continuing growth prospects of the business."
The transaction will be funded through GSK's existing cash resources, will be modestly earnings accretive immediately, and will not impact expectations for the group's long-term share buyback programme.