GlaxoSmithKline plc and GlaxoSmithKline Consumer Nigeria PLC have announced that they have reached agreement in principle on the terms of a proposal whereby GSK would increase its ownership in the Company from 46.4% to 80% (the “Proposal”).
A minimum public shareholding of 20% is required for a company to maintain a listing on the Nigerian Stock Exchange.
Under the terms of the Proposal, GSK would acquire approximately 321 million shares in the Company on a pro rata basis from public shareholders, at an offer price of NGN 48 per share. It is intended that the Proposal be effected by way of a Scheme of Arrangement.
GSK Nigeria is engaged in the manufacture, marketing and distribution of a wide range of Consumer Healthcare brands including Panadol, Sensodyne, Horlicks and Lucozade.
In addition the Company also sells several pharmaceutical products including antibiotics such as Augmentin and vaccines.
Approximately 70% of the revenue is from Consumer Healthcare Brands and 30% from Pharmaceuticals and Vaccines.
The Proposal represents a premium of 28% to the Company’s closing share price on 23 November, 2012.
The total value of the transaction at the offer price is approximately NGN 15.4 billion (£62 million).
Chief Olusegun Osunkeye, Chairman, GSK Nigeria said: “The Board of Directors unanimously believes that the Proposal is in the best interests of the continued growth of the Company, the shareholders, employees and customers, the community and Nigeria and intends to recommend it to shareholders.”
David Redfern, Chief Strategy Officer, GSK said: “This Proposal to increase GSK’s ownership of GlaxoSmithKline Consumer Nigeria reiterates our long term support of the Company’s strategy and our confidence in the continuing growth prospects of the business.”
The transaction will be funded through GSK’s existing cash resources, will be modestly earnings accretive immediately, and will not impact expectations for the Group’s long-term share buyback programme.
The Company generated turnover of over NGN 21.5 billion in 2011 with a Compound Annual Growth Rate (CAGR) over the past four years of 21%.
The Proposal will be subject to requisite shareholder, regulatory and Court approvals including those of The Nigerian Stock Exchange and the Securities and Exchange Commission.
Citigroup Global Markets Limited is acting as financial adviser to GSK.