GSK to spend $1 billion to lift stakes in India, Nigeria units

Mon Nov 26, 2012 10:36am EST
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By Kaustubh Kulkarni

MUMBAI (Reuters) - GlaxoSmithKline Plc plans to spend more than $1 billion to raise stakes in its Indian and Nigerian consumer healthcare arms, as Britain's biggest drugmaker deepens its emerging markets and non-prescription consumer health footprint.

The deals are the latest of several by GSK, which is reducing its reliance on traditional prescription drug markets in Western economies where sales are slowing.

GSK said on Monday it will buy up to an additional 31.8 percent stake in India's GlaxoSmithKline Consumer Healthcare Ltd for about $940 million by paying 3,900 rupees ($70.16) per share in an open offer. The price was a premium of 28 percent to the stock's Friday close.

On similar lines, GSK also said it plans to raise the stake in its Nigerian consumer products unit, GlaxoSmithKline Consumer Nigeria Plc, to 80 percent from 46.4 percent now in a $98 million deal.

After 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 percent from 43.2 percent.

"The offer shows their commitment to India business," said Daljeet Kohli, head of research, at brokerage IndiaNivesh in Mumbai.

"Also, having 75 percent control is as good as having full control. You can take any decision or pass any resolution you want," he added.

Under Indian regulations, controlling shareholders can own up to a maximum 75 percent in a listed company and are not obliged to make an offer for the remaining 25 percent 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.   Continued...

A GlaxoSmithKline logo is seen outside one of its buildings in west London, February 6, 2008. REUTERS/Toby Melville