London: GlaxoSmithKline, the UK's biggest drugmaker, plans to buy shares in its publicly traded Indian and Nigerian consumer-products subsidiaries, boosting its stake in businesses that are growing faster than branded pharmaceuticals.
Glaxo offered to buy as many as 13.4 million shares of India's GlaxoSmithKline Consumer Healthcare for Rs3,900 each, or a total of Rs52.2 billion ($940 million), the London-based company said in a statement yesterday.
Glaxo also will buy about 321 million shares of GlaxoSmithKline Consumer Nigeria at 48 naira a share, for a total of 15.4 billion naira ($100 million), Glaxo said in a separate statement.
The Indian unit sells Horlicks and Boost nutritional drinks, Sensodyne toothpaste and Eno antacid, among other consumer products. Horlicks is India's top packaged beverage behind bottled water and sells more than twice as much as PepsiCo's namesake cola.
"The transaction represents a further step in GSK's strategy to invest in the world's fastest growing markets," David Redfern, chief strategy officer at Glaxo, said in a statement about the India deal. "GSK Consumer Healthcare is a well-established business in India and its leading product, Horlicks, is an iconic household brand."
Shares of the Indian unit jumped 20 per cent to Rs3,659.2 at in Mumbai. The Nigerian unit's stock closed November 23 at 37.51 naira. The offer price in both cases is about 28 per cent above the last close for the shares.
The drugmaker has two subsidiaries in India, one of which sells over-the-counter consumer products such as nutritional drinks and cookies, and the other sells prescription drugs such as the antibiotic Augmentin.
Sales at the Indian consumer unit have increased 19 per cent annually over the past five years, while the Nigerian company's revenue has increased 21 per cent annually in the past four years. Glaxo's pharmaceutical sales fell 2 percent at constant exchange rates in the first nine months of this year.
The Nigerian unit manufactures, markets and distributes consumer-health brands including Sensodyne, Horlicks and the Lucozade sports drink. The company also sells pharmaceutical products including antibiotics such as Augmentin and vaccines, according to the company.
If Glaxo buys the maximum amount of shares in the offers, the company's stake in the India unit will rise to 75 per cent from 43.2 per cent and its holding of the Nigeria operation will climb to 80 per cent from 46.4 per cent.
Indian law requires a minimum public shareholding of 25 per cent, while 20 per cent is needed for a Nigerian stock listing.