GlaxoSmithKline Ups Its Stake in Indian Pharmaceutical Unit
GlaxoSmithKline plc (NYSE:GSK) has announced that it will up its stake in its Indian subsidiary, according to a press release issued Sunday. The company will own 75 percent of the pharmaceutical subsidiary unit after the deal, up from 50.5 percent previously. The Indian unit will remain publicly listed, the company added.
The transaction is valued at more than $1 billion. The British pharmaceutical giant said in a statement that it paid 64 billion rupees, or approximately $1.05 billion for the subsidiary.
The company offered to pay 3,100 Indian rupees per share, as part of an open offer to shareholders between February 18 and March 5; the final payment for shares sold to GlaxoSmithKline will be completed on or before March 20, 2014, the company stated in the press release.
Glaxo’s Indian unit accepted 20.61 billion shares from the shareholders at British GlaxoSmithKline, comprising approximately 23 percent of the company’s total shares outstanding.
“We are very pleased with the outcome of this transaction, which further increases our exposure to a strategically important market,” David Redfern, GlaxoSmithKline’s chief strategy officer said in the company’s statement. “It is a significant vote of confidence in the future growth prospects of our pharmaceuticals business in India and underlines GSK’s longstanding commitment to the country.”
The company first announced its intention to raise its stake in the subsidiary in December of 2013; a 75 percent stake allows Glaxo to continue to trading on the Indian stock market.
The company, which has had a presence in India for some 90 years, according to a Reuters report, has been eager to get a stronger foothold on the country’s $14 billion a year market, which the company sees as an important and promising step, given the country’s rapid growth. Glaxo remains optimistic despite recent price cuts in the country, as well as moves to limit patents on certain drugs.