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Glaxo sells stake in SA's Aspen for R8.47bn

Sep 29 2016 10:49
Ketaki Gokhale

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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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London - GlaxoSmithKline, the UK’s biggest drugmaker, disposed of the final portion of its stake in Aspen Pharmacare [JSE:APN] for about $619m, less than a month after selling the company a portfolio of anesthetic medicines.

Glaxo sold 28.2 million shares, equal to 6.2% of Aspen’s ordinary share capital, to institutional investors for R300 each or R8.47bn, according to a statement on Thursday. That was a 5% discount to Aspen’s closing price in Johannesburg on Wednesday of R316.87.

The sale ends Glaxo’s seven years as a shareholder in the Durban-based company, Africa’s biggest maker of generic drugs with sales in more than 150 countries. During that time the stock has risen six-fold, Glaxo said. The UK drugmaker sold the same number of shares in 2013 for about $694m and again last year for about $842m.

“Glaxo has had a long and successful partnership with Aspen and our investment in the company has grown in value significantly over time,” Chief Financial Officer Simon Dingemans said in the statement. Proceeds of the divestment will be used by Glaxo for general corporate purposes, the company said.

Aspen shares fell 3.4% to R306.14 as of 9:40. About 4 million shares traded, or more than triple 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 0.2% to 1 659 pence as of 8:29, extending gains for the year to 23%.

Partnership unaffected

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

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 to remain a member of Aspen board of directors.

Citigroup Global Markets and UBS will be 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.

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