GSK raises $853 million by halving stake in South African drugmaker

By Reuters

Mar 13, 2015 05:13 AM EDT

GlaxoSmithKline (GSK.L) has taken profits in Aspen Pharmacare (APNJ.J) by selling half its stake in the South African drugmaker for $853 million, following a long investment in the firm.

The sale, which was conducted through a share placing at a discount to the market price, is the latest example of GSK pruning non-core investments as it refocuses its business and works to protect its sizeable dividend payments to shareholders.

Britain's biggest drugmaker will remain a 6.2 percent shareholder in Aspen and has undertaken not to sell any more shares in the South African group for 180 days.

GSK said on Friday it had sold 28.2 million Aspen shares at a 372 rand each, compared to Thursday's closing price of 406.5. The sale was handled by Citi (C.N) and UBS (UBSN.S).

In November 2013, GSK sold another similar sized tranche of Aspen stock for 250 rand a share.

Simon Dingemans, GSK's chief financial officer, said the disposal would help give his company flexibility to invest in new opportunities in the wake of a $20 billion-plus asset swap transaction with Novartis (NOVN.VX).

"As we continue to reshape the group around our core franchises and drive the benefits from the Novartis transaction, optimizing our financial flexibility to invest behind these priorities is key," he said in a statement.

"As a result we have decided now is the right time to realize further value from this successful relationship. We continue to believe in the strategy of Aspen and we remain committed to working together in the future."

GSK said that the net profit on the disposal would not be included in core operating profit and core earnings in 2015, and GSK would no longer account for Aspen as an associate.

However, the British group's head of strategy David Redfern, who was recently appointed as GSK's nominee director on Aspen's board to replace GSK president of pharmaceuticals Abbas Hussain, will remain a director, Aspen said.

GSK has been suffering from weak sales of its key respiratory drugs in the past year, especially in the United States, and has implemented a 1 billion pounds ($1.49 billion) cost-cutting program.

It is also considering an initial public offering for its majority-owned HIV unit, known as ViiV Healthcare. But plans to sell a portfolio of older drugs were dropped in December.

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