UK-based pharmaceuticals major GlaxoSmithKline has approached the Foreign Investment Promotion Board to hike its stake in the domestic arm by buying 24.33 per cent for an estimated Rs 6,400 crore.
The proposal will be taken up during FIPB meeting headed by Economic Affairs Secretary Arvind Mayaram on January 10.
According to sources, the Singapore arm of the UK-based pharma firm will be buying 24.33 per cent stake or 2.06 crore equity shares in GlaxoSmithKline Pharmaceuticals Ltd through an open offer.
After purchase, the holding of the promoter group companies in the Indian subsidiary will go up to 75 per cent from the current 50.67 per cent.
GlaxoSmithKline Pharmaceuticals is already majority owned and controlled by the GSK Group. “The proposed transaction will not result in any change in control of the Indian arm,” the sources told PTI.
Foreign exchange inflows
The acquisition would result in foreign exchange inflows to the tune of Rs 6,400 crore, they added.
The offer is scheduled to remain open between February 7 and February 21.
FDI policy
As per the FDI policy, foreign direct investments up to 100 per cent are permitted in brownfield investments (investments in existing Indian companies) in the pharma sector, subject to FIPB approval.
GSK Pharma is engaged in manufacturing, distributing and trading. The company’s product portfolio includes prescription medicines and vaccines across therapeutic areas such as anti-infectives, dermatology, and gynaecology.
The company employs more than 5,000 people across its operations and generated more than Rs 2,600-crore turnover in the financial year ended December 31, 2012.
Besides GlaxoSmithKline, FIPB will also consider seven other FDI proposals in the pharma sector. These include that of Lupin, Laurus Labs, and Abbvie Japan Holdings B.V. In total, it would consider 22 FDI proposals across various sectors.