GlaxoSmithKline to increase stake in Indian subsidiary by Rs 6.38K crore

GlaxoSmithKline to increase stake in Indian subsidiary by Rs 6.38K croreGlaxoSmithKline Pharmaceutical's shares touched a 52-week high of Rs2,952 apiece on the NSE after its UK parent GlaxoSmithKline (GSK)  said it will spend Rs6,389 crore (£629 million) to raise stake in its Indian unit, GlaxoSmithKline Pharmaceuticals, through a voluntary open offer.

GSK is planning to hike its stake in the Indian unit to up to 75 per cent from 50.67 per cent. Following the announcement, GSK Pharma shares surged 19.59 per cent.

GSK will buy up to 20,609,774 shares (or a 24.3% stake) of GSK Pharma at Rs3, 100 per share, through a voluntary open offer, signifying a 26% premium to Friday's closing price.

GSK, chief strategy officer, David Redfern said the deal will increase the parent's exposure to India, "a strategically important market" where GSK has a proud heritage.

He also added that "The open offer is a further demonstration of our long-term commitment to the country, having increased our holding in our consumer business (GlaxoSmithKline Consumer Healthcare) earlier this year and more recently committed to a significant manufacturing investment."

GSK will fund the deal through its existing cash resources and will be earnings-neutral for the first year and accretive thereafter.