Glaxo to buy stake in South Africa’s Aspen

Glaxo to buy stake in South Africa’s Aspen
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First Published: Wed, Mar 25 2009. 05 23 PM IST
Updated: Wed, Mar 25 2009. 05 23 PM IST
Johannesburg / London: GlaxoSmithKline Plc plans to take a significant stake in Aspen Pharmacare Holdings Ltd to strengthen its partnership with the South African drugmaker, people familiar with the situation said.
The move, which could be announced in the next week or so, underlines Glaxo’s commitment to growing in emerging markets as part of a strategy to diversify its business.
Shares in Aspen jumped as much 12% to 54 rand on the news, while Glaxo was 1.2% firmer at 10.16 pounds by 1045 GMT.
Glaxo and Aspen declined to comment.
Aspen has a market value of around $2 billion, so buying into the group will be no financial strain for Glaxo, the world’s second-largest seller of prescription drugs.
The equity stake is set to cement an existing relationship between the two companies and could set the scene for further expansion of their alliance, the sources said.
Aspen -- Africa’s biggest producer of generic drugs, which also operates in Latin America and India -- has already partnered with Glaxo on selling medicines under a deal clinched last July.
That deal gave the British-based group access to a broad range of low-cost unpatented drugs, which Glaxo plans to re-brand as its own for sale in emerging markets from 2010.
Aspen said in January it was in negotiations that could affect its share price, triggering speculation at the time that Glaxo might buy all or part of the group.
Earlier this month, Stephen Saad, Aspen’s chief executive officer, told Reuters that the firm had attracted buyer interest and he expected to give details of unspecified talks soon.
“Saad is the founder of the company but he’s also a commercial man -- I don’t think he’d stand in the way of the deal if the price is right,” commented Andrew Joannou, a portfolio manager at Afena Capital.
Aspen stock has risen by more than a third since the announcement about talks on 13 January.
Aspen is the leading supplier of HIV/AIDS drugs in South Africa, which has the world’s highest incidence of people infected with HIV.
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First Published: Wed, Mar 25 2009. 05 23 PM IST