GSK completes buying stake in SA's Aspen, upping this to 19%

UK-based drug giant GlaxoSmithKline says it has completed the extension of its strategic relationship with South Africa's largest pharmaceutical firm, Aspen Pharmacare, and the acquisition of a minority shareholding in the company.

However, when the announcement was first made in the spring (The Pharma Letter May 13) the stake was to be 16%, but has now been increased to 19%. This is part of a wide ranging agreement which includes combining commercial activities in Sub-Saharan Africa and the divestment of several assets ' notably eight specialty drugs - to Aspen.

Shares in Aspen hit a record 69.59 rand on the news and were 2.1% higher at 69.40 by 08.25 GMT, while GSK rose 0.7%.

On completion, Aspen issued 68.5 million ordinary shares to GSK in consideration for the transfer of assets. Taken together with Aspen shares acquired by GSK between signing and closing, this issue takes GSK's holding in Aspen to a total of 81.7million shares, the equivalent of a 19, at a total cost now estimated by analysts at $593 million versus the original estimate of $365 million.

In addition, Abbas Hussain, president Emerging Markets at the drug major, will be appointed to Aspen's board of directors as a non-executive director with effect from December 7.

Sales of GSK's pharmaceutical products in South Africa last year totaled around £45 million ($68.8 million), while combined turnover of the other eight products it is divesting to Aspen reached £56 million.