Glaxo to pump in Rs 5,221 cr to hike stake in Indian arm
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GlaxoSmithKline plans to invest Rs 5,221 crore in its Indian subsidiary, GlaxoSmithKline Consumer Healthcare (GSKCH). The investment will push up the UK-based company's stake in the Indian firm to75 per cent.
The plan is in line with its bid to deepen its exposure in emerging markets and in non-prescription consumer health footprint.
The company said it will buy an additional 31.8 per cent stake in GSKCH by paying Rs 3,900 per share in an open offer. The price was a premium of 28 per cent to the stock's Friday close. GSKCH shares jumped to a record high on the GSK move. The shares hit the upper circuit filter of 20 per cent at Rs 3,651.80 on the BSE on Monday.
Post the offer, GSK's stake in the Indian consumer products arm, which makes health drinks and over-the-counter drugs and balms, will rise to 75 per cent from 43.2 per cent. Under the Sebi regulations, controlling shareholders can own up to a maximum 75 per cent in a listed company and are not obliged to make an offer for the remaining 25 per cent stake, which has to be in public hands for the company to remain listed. GSK said it does not plan to de-list the Indian unit.
GSK chief strategy officer David Redfern said, "This transaction represents a further step in GSK's strategy to invest in the world's fastest growing markets and, we believe, it offers a liquidity opportunity at an attractive premium for existing shareholders."
The transaction, to 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. Subject to regulatory clearance, the offer period is expected to begin in January 2013.