GlaxoSmithKline on Monday said it will increase stake in its consumer healthcare subsidiary in India — GlaxoSmithKline Consumer Healthcare, from 43.2 per cent to up to 75 per cent through a voluntary open offer at a price of Rs 3,900 a share. The potential value of the transaction is pegged at approximately Rs 5,220 crore (£591 million).
This offer represents a premium of about 28 per cent to the company’s closing share price on the NSE on Friday (November 23).
This sent the shares of the company soaring and they were locked at the 20 per cent upper circuit following the announcement of the open offer on both exchanges. On the BSE, its share price was frozen at Rs 3,651.80, on the NSE at Rs 3659.20, up 20 per cent.
Investment strategy
In a statement, David Redfern, Chief Strategy Officer, GSK said, “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 offer, which is made pursuant to the rules of the Securities and Exchange Board of India, is to acquire up to 1.33 crore shares, representing 31.8 per cent of the total outstanding shares of the Indian Company, it added.
Subject to regulatory clearance, the offer period is expected to begin in January 2013
“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 buy-back programme,” the company said.
Securities regulations in India require a minimum public shareholding of 25 per cent for a company to maintain a public listing in the country.