GlaxoSmithKline plc (GSK) has agreed to extend its strategic relationship with Aspen Pharmacare Holdings Limited (Aspen) and to acquire a 16 per cent shareholding in the South African based pharmaceuticals company. This is part of a wide ranging agreement which includes combining commercial activities in sub-Saharan Africa and the divestment of several assets to Aspen.
Abbas Hussain, president Emerging Markets, GlaxoSmithKline said, "Extending our strategic relationship with Aspen supports GSK's strategy to accelerate sales growth in emerging markets. The combination of our commercial activities in Sub-Saharan Africa is highly complementary and will mean that together we can provide more medicines of value to more patients in these countries. At the same time, GSK will also benefit from investing in one of Africa's leading healthcare companies with a formidable track record of delivery."
On completion, Aspen will issue 68.5 million new shares as non-cash consideration to GSK in exchange for the transfer of several assets. These shares will be equivalent to a 16 per cent shareholding in the company; and Aspen has a current total market capitalisation value of £1.4 billion. As part of the agreement and on closure of the transaction, Aspen will appoint a non-executive director, nominated by GSK, to its Board of Directors.
GSK will divest eight specialist medicines to Aspen and a manufacturing facility located in Bad Oldesloe, Germany. The products to be divested are Alkeran (excluding US), Kemadrin, Lanvis, Leukeran, Myleran, Purinethol, Septrin and Trandate. Combined sales of these products were £56 million in 2008. The Bad Oldesloe manufacturing site produces some of the products to be divested and a number of other products previously acquired by Aspen from GSK in June 2008.
These divestments reflect GSK's strategy to simplify its operations and divest certain products which can be more efficiently commercialised by other parties.
Under the terms of the agreement, GSK and Aspen will collaborate on the commercialisation of their current and future product portfolios in Sub-Saharan Africa (excluding South Africa). The vast majority of combined current sales in this region (approximately £65 million in 2008) are attributable to GSK. Going forward, the collaboration will build a broader and more diverse portfolio for these countries, with Aspen's extensive pipeline of new products expected to benefit from greater leverage through GSK's existing commercial infrastructure.
In South Africa, where Aspen has extensive commercial capability, GSK will transfer marketing and distribution rights to Aspen for its pharmaceutical products. In 2008, sales of these pharmaceutical products were approximately £45 million.
GSK will record an one-off non-cash, pre-tax profit on the expected closure of the transaction, representing the profit on disposal of the GSK assets to Aspen. This item will be reported within Other Operating Income. The impact of this transaction to GSK's earnings per share is expected to be accretive in 2009 and slightly dilutive (<1 per cent) in 2010.
The agreement is subject to regulatory approvals and is expected to complete before the end of 2009, a GSK press release said.