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GSK drops plan to raise stake in Nigerian unit

By The Rainbow
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GlaxoSmithKline has suspended plans to raise its stake in GSK Consumer Nigeria, after the African company's minority shareholders opposed the deal.

GSK had wanted to increase its stake in the Nigerian company from 46 per cent to 75 per cent via a scheme of arrangement that would have seen the FTSE 100 company buy shares in GSK Nigeria from existing investors

The decision to abandon a scheme is a fresh setback for Britain's biggest drugmaker, which is battling a corruption scandal in China.

The company said on Monday it had agreed to consult shareholders and the Securities and Exchange Commission (SEC) about the proposal, including whether it should be implemented by way of a tender offer.

SEC is reported to have barred  GSK UK from voting during court-ordered general meeting tomorrow (Tuesday) to consider its proposal to raise its stake from 46.4 per cent to 75 per cent in Glaxosmithkline Consumer Nigeria Plc.

SEC is also reported to have fixed the company's share price for the possible tender offer at a minimum of N60 per share, compared with the N48 initially approved.

GSK UK had last November come up with the proposal to  invest more in  its Nigerian subsidiary but that investment would only come after increasing its holding to 75 per cent, which the board of GSK Nigeria accepted

Minority shareholders however opposed the move, saying it is a ploy to alienate them  and delist the company from the Nigerian Stock Exchange in future just like the way Coca Cola Hellenic Bottling Company South Africa used its controlling stake in Nigerian Bottling Company Plc to delist the company last year.