GlaxoSmithKline a global healthcare company that develops, manufactures and markets pharmaceutical products, including vaccines, over-the-counter (OTC) medicines and health-related consumer products. I have a holding in my income portfolio (epic code: GSK).
Today Glaxo announced an open offer to increase its stake in its publicly-listed pharmaceuticals subsidiary in India from 50.7% to up to 75% at a price of INR 3,100 per share.
The Offer is at a premium of approximately 26% to the company's closing price on Friday and values the business at just over INR 263bn. The cost to Glaxo is approximately INR 64bn (£629m).
The Indian company's earnings in the financial year ended 31 December, 2012 were approximately INR 5.6bn (£66m at 2012 average exchange rates). The price Glaxo are offering values the business at a P/E of 47.
This follows on from Glaxo's purchase last year of 28.3% of their other Indian subsidiary - Consumer Healthcare for INR 48bn (£568m), bringing their ownership to 72.5%.
Glaxo also purchased 33.6% of its Nigerian subsidiary for NGN 15.4bn (£62m) to bring its holding to 80%.
To retain a public listing in India the minimum free float must be 25% and in Nigeria 20%.
It will be interesting to see whether the current offer achieves anywhere near the target of 75%. Unilever recently acquired 14.8% of its Indian subsidiary Hindustan Unilever bringing its holding to 67.28% compared to their target of 75%, see comment here.
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