Home/ Companies / GlaxoSmithKline sells stake in South Africa’s Aspen for $619 million

London: GlaxoSmithKline Plc ended its seven-year run as an investor in Aspen Pharmacare Holdings Ltd, selling the final portion of its stake in the South African company for about $619 million.

Shares of the Durban-based company, Africa’s biggest maker of generic drugs with sales in more than 150 countries, have risen six-fold during that period, Glaxo said Wednesday in a statement. Since Glaxo last sold Aspen shares, the stock has declined about 21%. Aspen fell to its lowest intraday level since May on Thursday.

Over the course of Glaxo’s investment, Aspen has been a buyer of Glaxo assets including injectable thrombosis brands, a manufacturing site and, most recently, anesthetic medicines. The companies said their relationship will continue.

Glaxo’s sale “in no way affects the ongoing collaboration between Aspen and Glaxo in South Africa and a number of other trading relationships between the two companies," Aspen said in a separate statement. Glaxo chief strategy officer David Redfern will remain a member of Aspen’s board.

Share sales

Glaxo sold 28.2 million shares, equal to 6.2% of Aspen’s ordinary share capital, to institutional investors, according to a statement on Thursday. The price of 300 rand each was a 5% discount to Aspen’s closing price in Johannesburg on Wednesday of 316.87 rand. The sale generated 8.47 billion rand ($619 million).

Citigroup Global Markets Ltd and UBS Ltd were joint bookrunners in the offering. The profit from the disposal will not be included in Glaxo’s core operating profit and core earnings per share in 2016.

The UK drugmaker sold the same number of shares in 2013 for about $694 million and again last year for about $842 million.

The disposal of the Aspen stake was done in phases, with the aim of generating funds to “deploy behind the group’s priorities," chief financial officer Simon Dingemans said in the statement. Those priorities include developing new products and diversifying its business, which comprises prescription medicines, consumer health-care products and vaccines.

Aspen shares fell 2.2% to 309.83 rand as of 10:52 am in Johannesburg. About 8 million shares traded, or more than seven times the three-month daily average.

Glaxo this month appointed Emma Walmsley as chief executive officer to succeed Andrew Witty next year, tasking her with piloting cutting edge treatments for cancer and infectious diseases through clinical tests and onto pharmacy shelves to boost earnings. The stock rose 0.3% to 1,659.50 pence as of 9:54 am in London, extending gains for the year to 21%.

Glaxo sold Aspen the anesthetics portfolio this month for as much as £280 million ($364 million). The deal added to the anesthetics Aspen bought in June from AstraZeneca Plc of the UK for as much as $770 million. The South African company is also expanding in China. Bloomberg

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Updated: 29 Sep 2016, 03:35 PM IST
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