GlaxoSmithKline (GSK) has announced a Voluntary Open Offer to increase its stake in its publicly-listed Consumer Healthcare subsidiary in India (GlaxoSmithKline Consumer Healthcare Ltd.) from 43.2 per cent to up to 75 per cent at a price of Rs.3,900 per share. Securities regulations in India require a minimum public shareholding of 25 per cent for a company to maintain a public listing in the country.
The Offer, which is made pursuant to the rules of the Securities and Exchange Board of India, is to acquire up to 13,389,410 shares, representing 31.8 per cent of the total outstanding shares of the Indian company. The Offer represents a premium of approximately 28 per cent to the company’s closing share price on the National Stock Exchange of India Limited on November 23, 2012 and 22 per cent to the 12 month high on BSE Ltd. The potential total value of the transaction at the Offer price is approximately Rs.52.2 billion or £591 million.
David Redfern, chief strategy officer, GSK said, “GSK Consumer Healthcare is a well established business in India and its leading product, Horlicks, is an iconic household brand. 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 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 buyback programme.
GSK’s Consumer Healthcare business in India generated over Rs.28 billion turnover in the financial year ended December 31, 2011 (approximately £380 million at 2011 average exchange rates) with a Compound Annual Growth Rate (CAGR) over the past five years of 19 per cent. The Company employs approximately 3,200 people.
Subject to regulatory clearance, the Offer period is expected to begin in January 2013. Payment for the shares will take place shortly after close of the Offer. The company’s shares are traded on the BSE Ltd (500676) and the National Stock Exchange of India Limited (GSKCONS).
The Offer is being managed by HSBC Securities and Capital Markets (India) Private Limited.