GSK Pharma rallies 20% as parent initiates open offer

NEW DELHI: GSK Pharmaceuticals Ltd rallied as much as 19.59 per cent to hit its 52-week high of Rs 2,952 on the Bombay Stock Exchange, after GlaxoSmithKline (GSK) announced a voluntary open offer to increase its stake in its publicly-listed pharmaceuticals subsidiary in India.

At 09:25 a.m.; the stock was trading 18.7 per cent higher at 2,930. It hit a low of Rs 2,900 and a 52-week high of Rs 2,952 in trade today.

The offer, which is made pursuant to the rules of the Securities and Exchange Board of India ( SEBI), is to acquire up to 20,609,774 shares, representing 24.3 per cent of the total outstanding shares of the Indian company, added the statement by GSK.

The parent of GlaxoSmithKline Pharmaceuticals Ltd plans to increase its stake from 50.7 per cent to up to 75 per cent at an offer price of Rs 3,100 per share, which is at a premium of 25.5 per cent or nearly 26 per cent from Friday's closing price of Rs 2,468.40.

Securities regulations in India require a minimum public shareholding of 25 per cent for a company to maintain a public listing in the country. GSK intends to keep the Company publicly-listed, it said in a filing with the Bombay Stock Exchange.

This closing price represents an appreciation of 19 per cent over the last 12 months. The potential total value of the transaction at the offer price is approximately Rs 64 billion or £629 million.

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.

"This transaction will increase exposure to a strategically important market and for our Indian pharmaceuticals subsidiary's shareholders we believe it offers a good liquidity opportunity at an attractive premium," GSK said in the filing.

GSK's Indian pharmaceuticals subsidiary manufactures, distributes and commercialises pharmaceuticals and vaccines across multiple therapeutic areas including respiratory, cardiovascular, oncology, anti-infectives and dermatology.