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Glaxo pays Aspen R761m to end collaboration

Jan 03 2017 10:17
Matthew le Cordeur

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Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Cape Town - Aspen Global's local arm Aspen Pharmacare [JSE:APN] announced on Tuesday that GlaxoSmithKline (GSK) paid the JSE-listed company £45m (R761.07m) to end its sub-Saharan Africa (SSA) collaboration.

The payment officially ended the collaboration between the two pharmaceutical companies, after it announced on September 12 2016 that GSK would end its collaboration.

“Pharmacare and GSK had agreed to cancel the rights of Pharmacare to collaborate in the sub-Saharan business of GSK and that GSK would pay Pharmacare £45m as consideration for the cancellation of the SSA collaboration,” Pharmacare said in a statement on Tuesday.

The announcement of the end of the collaboration was followed by the September 29 2016 announcement that GSK would dispose all its shares in Aspen, worth about R8.47bn. 

Aspen said in a statement at the time that the disposal would in no way affect the ongoing collaboration between Aspen and GSK in South Africa and a number of other trading relationships between the two companies.

However, shares slumped to their lowest in four months at the time.

Aspen CEO Stephen Saad said on September 29 that “Aspen’s exceptional relationship with GSK and the many mutually beneficial trading activities between the companies remain unaffected by this disposal”.

“We are pleased that Aspen shareholders are relieved of the uncertainty caused by GSK’s stated intention to dispose of its interests, which eliminates the overhang caused by this uncertainty,” he said.

Aspen’s share price shifted slightly higher by 0.37% to R284.63 by 10:00 on Tuesday, with a price/earnings ratio of 31.85. The share price has declined 34% since it traded at R380.36 on 31 July 2016 and 54% since it traded at R438 on 1 February 2015.

Aspen Global also announced on Tuesday that it had exercised its option to acquire Fraxiparine and Arixtra in certain countries to which GSK retained the rights, most notably China, for a consideration of £45m.

Both transactions were completed on December 31.

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