GSK to make Rs 6,389-cr open offer to hike Indian arm stake to 75%
17 Dec 2013 5:53 AM IST
Through the offer, GSK is looking at hiking its holding in GlaxoSmithKline Pharmaceuticals to up to 75 per cent from 50.67 per cent, in line with FMCG giant Unilever increasing stake in its Indian arm HUL earlier this year. As per the open offer, GSK will acquire 20,609,774 shares of face value Rs 10 each, representing 24.3 per cent of the total outstanding shares of the Indian firm, at Rs 3,100 a piece, GlaxoSmithKline Pharmaceuticals said in a filing to the BSE.
Subject to regulatory clearance, the offer period is expected to begin in February 2014, GSK said in a statement. '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,' it added. The offer represents a premium of approximately 26 per cent to the company's closing share price on the NSE on 13 December, 2013, it said. Commenting on the offer, GSK chief strategy officer David Redfern 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.'
He further said the announcement is a further demonstration of GSK's long term commitment to India 'having increased our holding in our consumer business earlier this year'. 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, the company said.
'The buyback of the shares is at an attractive price, much above the current market price and is a strong indicator from the management's side towards the listed entity. The stock would move on the way up on the buyback,' said Sarabjit Kour Nangra, VP-Research, Pharma, Angel Broking.
Subject to regulatory clearance, the offer period is expected to begin in February 2014, GSK said in a statement. '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,' it added. The offer represents a premium of approximately 26 per cent to the company's closing share price on the NSE on 13 December, 2013, it said. Commenting on the offer, GSK chief strategy officer David Redfern 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.'
He further said the announcement is a further demonstration of GSK's long term commitment to India 'having increased our holding in our consumer business earlier this year'. 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, the company said.
'The buyback of the shares is at an attractive price, much above the current market price and is a strong indicator from the management's side towards the listed entity. The stock would move on the way up on the buyback,' said Sarabjit Kour Nangra, VP-Research, Pharma, Angel Broking.
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