Glaxo completes $1B open offer to raise stake in Indian pharma arm to 75%

British pharmaceutical giant GlaxoSmithKline Plc (GSK) has completed its voluntary open offer for the Indian pharma arm, spending around Rs 6,400 crore ($1.03 billion) to hike its holding to 75 per cent. The open offer was fully subscribed.

The company had announced earlier in December that it plans to increase its holdings in GlaxoSmithKline Pharmaceuticals Ltd from 50.7 per cent to 75 per cent. The open offer was managed by HSBC Securities and Capital Markets (India) Pvt Ltd.

The company accepted around 20.61 million shares from shareholders of GSK Pharma, representing around 24.33 per cent. The open offer started on February 18, 2014 and closed on March 5, 2014.

The group paid around Rs 3,100 per share which brought the transaction to about Rs 6,400 crore.

The development comes at a time when the group’s Indian pharmaceutical arm has been facing headwinds in the country. In 2013, the government revised the National Pharmaceutical Policy, increasing the number of drugs under price control to 348 from 74. Over 28 per cent of company’s current sales come under National List of Essential Medicines (NELM).

For the year ended December 31, 2013, GSK Pharma saw revenues decline 3 per cent to Rs 2,538 crore with net profit shrinking 14 per cent to Rs 482 crore.

Notably, GSK has decided to keep its Indian arm listed. Market regulator SEBI’s listing norms call for public listed companies to maintain at least 25 per cent free float.

Many MNCs, which have a listed Indian arm, came out with voluntary offers to hike their stake including Unilever (HUL), Moody’s (ICRA) and McGraw Hill (CRISIL). Unilever’s $5 billion offer last year was the biggest ever. The FMCG giant saw only two-thirds of the total shares it planned to pick, tendered by the public shareholders and paid around $3.2 billion to hike its stake to 67.3 per cent instead of intended 75 per cent.

In the pharmaceutical sector, AstraZeneca is looking to delist its Indian arm. The company which owns 75 per cent in its Indian subsidiary is looking to spend around $100 million to acquire the remaining 25 per cent. The board of the Indian arm, however, deferred it asking for more information from its foreign parent on its offer.

(Edited by Joby Puthuparampil Johnson)

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