GSK initiates voluntary offer to increase stake in its publically-listed Healthcare subsidiary

The FINANCIAL — GlaxoSmithKline announced a Voluntary Open Offer (the “Offer”) to increase its stake in its publicly-listed Consumer Healthcare subsidiary in India (GlaxoSmithKline Consumer Healthcare Ltd, the “Company”) from 43.2% to up to 75% at a price of INR 3,900 per share.

Securities regulations in India require a minimum public shareholding of 25% 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% of the total outstanding shares of the Indian Company. The Offer represents a premium of approximately 28% to the Company’s closing share price on the National Stock Exchange of India Limited on 23 November, 2012 and 22% to the 12 month high on BSE Ltd. As GlaxoSmithKline reported, the potential total value of the transaction at the Offer price is approximately INR 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 INR 28 billion turnover in the financial year ended 31 December, 2011 (approximately £380 million at 2011 average exchange rates) with a Compound Annual Growth Rate (CAGR) over the past five years of 19%.  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).