Mumbai, Nov. 26: GlaxoSmithKline Plc today unveiled plans for an open offer to acquire an additional 31.84 per cent stake in its consumer products arm, GlaxoSmithKline Consumer Healthcare Ltd, at Rs 3,900 a share, potentially valuing the share buyout at Rs 5,221.87 crore.
The company is offering an enticing 28 per cent premium over last Friday’s close of Rs 3,043.20 on the Bombay Stock Exchange. It hopes to acquire 13.39 million shares from its minority shareholders.
If the shareholders stump up all the shares, GlaxoSmithKline Plc and group company Horlicks Ltd, which holds 43.16 per cent in the malted foods and over-the-counter (OTC) drugs maker, will end up with a 75 per cent stake, enhancing their control of the non-prescription consumer healthcare company.
The GSK Consumer Healthcare stock leapt 20 per cent to Rs 3,651.80 on the BSE, hitting a circuit filter that stopped trading in the stock.
Britain’s biggest drug maker said the transaction would be funded out of its existing cash resources and would be earnings neutral in the first year. It doesn’t plan to come out with an open offer for its Indian prescription drug maker, GlaxoSmithKline Pharmaceuticals Ltd, in which it has a 50.67 per cent stake.
The open offer is expected to open in January.
GSK Consumer Healthcare reported net sales of Rs 2,770.68 crore in the year ended December 2011 and a net profit of Rs 355.21 crore. In the three months ended September 30 this year, it had posted a 24.8 per cent rise in net profit at Rs 128.55 crore. Net sales had grown 15.2 per cent to Rs 857.70 crore in the third quarter.
The company was formerly known as Smithkline Beecham Consumer Healthcare Ltd. It was renamed in April 2002 after the global merger of its parent firm, erstwhile SmithKline Beecham with Glaxo Wellcome plc in December 2000.
The company’s product portfolio is grouped under three heads: nutritionals, vending and OTC products.
Horlicks, the malted foods brand, has been present in India for over a 100 years. It is sold in four flavours: vanilla, toffee, elaichi and chocolate.
Besides Horlicks, the company owns a few other popular health food drink brands such as Boost, Maltova (a chocolate flavoured health food drink) and Viva. While Horlicks and Boost are its home-grown brands, Maltova and Viva were acquired from Jagatjit Industries in 2000.
The company has an installed capacity to manufacture 94,060 tonnes of malted milk products per annum, spread over three facilities located at Nabha (Punjab), Rajmundry (Andhra Pradesh) and Sonepat (Haryana). It also has a plant in Dowleswaram in Andhra Pradesh where it makes ghee and butter. The company is the second largest dairy products maker in the country.
Under its OTC business, the company promotes and distributes a number of products in diverse categories that are sold without the doctors’ prescription. Some of its famous brands under this category are Crocin (paracetamol), Eno (an antacid), Sensodyne (a toothpaste), and Iodex (a pain balm).
In a related development, GlaxoSmithKline announced plans to raise its stake in GlaxoSmithKline Consumer Nigeria Plc from 46.4 per cent to 80 per cent.
GSK will acquire approximately 321 million shares in the company on a pro rata basis from public shareholders at an offer price of 48 Nigerian Naira per share. The proposal represents a premium of 28 per cent to the company’s closing share price on 23 November. The total value of the transaction at the offer price is approximately NGN 15.4 billion (£62 million).
GSK Nigeria is engaged in the manufacture, marketing and distribution of a wide range of consumer healthcare brands, including Panadol, Sensodyne, Horlicks and Lucozade.
The company also sells several pharmaceutical products, including antibiotics such as Augmentin and vaccines. Approximately, 70 per cent of the revenue are from consumer healthcare brands and 30 per cent from pharmaceuticals and vaccines.