British pharma major GlaxoSmithKline Plc has decided to spend around $1 billion (Rs 6,400 crore, or £629 million) to raise its stake in its Indian unit, GlaxoSmithKline Pharmaceuticals, through a voluntary open offer.
GSK is planning to hike its stake in the Indian unit to up to 75 per cent from 50.67 per cent. Following the announcement, GSK Pharma shares surged 19.59 per cent to a 52-week high of Rs 2,952 before closing at Rs 2,927.40, up 18.60 per cent, on the BSE. This offer is about 26 per cent premium over the closing price on Friday.
The British firm will acquire 2.06 crore shares of face value Rs 10 each, representing 24.3 per cent of the total outstanding shares of the Indian firm, at Rs 3,100 per share, GSK said in a statement. As per Sebi regulations, promoters of listed companies can hold up to a maximum 75 per cent stake. If the promoter's stake rises beyond 75 per cent, the company has to be de-listed from the bourse.
GSK said it will maintain its holding at 75 per cent as mandated by Sebi regulations of 25 per cent public float.
Anglo-Dutch consumer goods company Unilever in July completed a deal to raise its stake in the Indian unit Hindustan Unilever to 67.28 per cent from 52.48 per cent in a deal worth about $3 billion.
In February, GSK hiked its stake in its publicly-listed Indian consumer healthcare subsidiary, GlaxoSmithKline Consumer Healthcare, to 72.5 per cent from 43.2 per cent for $901 million.
With the second deal announced on Monday, GSK is set to spend close to $2 billion in roughly a year to increase its holdings in two listed Indian companies, which is reportedly its biggest incremental investment in any country in the year.
David Redfern, chief strategy officer, GSK said: "For GSK, 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."
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