GSK Pharma open offer gets oversubscribed

Glaxo Group spends $1 billion to increase holding from 50.67% to 75% in Indian arm

The over $1-billion share repurchase by UK's Glaxo Group in its Indian arm, GlaxoSmithKline Pharmaceuticals, has received full subscription, helping the promoters to increase their shareholding to 75 per cent.

A little over 23 million shares were tendered by the public shareholders of GSK Pharma in the open offer, between February 19 and March 5. About 90 per cent of these are likely to be accepted by the company. The voluntary open offer by GSK was to purchase 20.61 million shares at Rs 3,100 each, amounting to Rs 6,389 crore.

This is the fourth such offer by a multinational corporation (MNC) since 2013. Such share buybacks by foreign promoters are to get a larger stake in their Indian arms, showing healthy growth. Among the four voluntary open offers made by MNCs in the past one year, GSK Pharma is the only one to have received full subscription. The shares ended at Rs 2,510 on Monday, down 5.3 per cent on the BSE.

"We are very pleased with the outcome, which further increases our exposure to a strategically important market. It is a significant vote of confidence in the growth prospects of our pharmaceuticals business in India and underlines GSK's long-standing commitment to the country," said David Redfern, chief strategy officer, GSK.

GSK was able to acquire 24.33 per cent stake through the open offer, taking the promoter holding in the company from 50.67 per cent to 75 per cent, the maximum a promoter can hold in a listed firm. This was the second biggest voluntary open offer after Unilever Plc, which in June 2013 had launched one to buy shares worth Rs 29,220 crore. However, it was able to spend only two-thirds of the amount, as the number of shares tendered were less than what the company was willing to buy.

HSBC Securities and Capital Markets had managed both the GSK and Unilever open offers.

GSK Consumer and CRISIL are the other two MNC-promoter companies which had launched a voluntary open offer in the past 15 months. Another such open offer, from credit rating firm ICRA, where US-based Moody's Investor Service has offered to buy 26.5 per cent, will hit the market soon.