GSK withdraws from proposed stake increase in Nigerian subsidiary

GlaxoSmithKline Plc has withdrawn its proposal to increase its holdings in GlaxoSmithKline Consumer Nigeria Plc to 75 per cent.

The UK-based company disclosed this in a statement issued on Monday by the Company Secretary, V. Whyte.

The statement said, 'GlaxoSmithKline Plc and GlaxoSmithKline Consumer Nigeria Plc today (Monday) announced that they had agreed that the scheme of arrangement proposed to GSK Nigeria's shareholders in the scheme document dated 24 June 2013, under which it was proposed that GSK would increase its indirect ownership in GSK Nigeria to 75 per cent, would be withdrawn.'

According to the statement, following the withdrawal, GSK Nigeria will suspend the proposed scheme of arrangement at the meeting of its shareholders scheduled for July 23 (today).

GSK Nigeria also confirmed this in a separate statement, saying the decision was taken following consultations with its shareholders and relevant regulatory bodies.

The Managing Director, GSK Consumer Nigeria Plc, Mr. Chidi Okoro, however, promised that the company was committed to the interest of its shareholders.

He said, 'GSK, as a company, believes in fairness and transparency in all its processes, and we are committed to shareholder's interest and the growth of the Nigerian economy.'

Stakeholders had expressed fears that once the parent company, which already owns majority stake in the company, succeeds in its plan to increase its stake to 75 per cent, it would be in position to delist the company as was the case with Nigerian Bottling Company.

This and other issues led minority shareholders to oppose the bill, while calling on regulatory authorities to reject the proposal and review its guidelines in order to protect them.

GSK explained in its statement that the decision to suspend the plan was to allow it to consider appropriate amendments to the proposal, stressing that both companies had agreed to consult shareholders and the Securities and Exchange Commission on the issue, including whether it should be implemented by way of a tender offer.

It added, 'Furthermore, as disclosed in the scheme document, GSK has announced its intention to dispose of its global Lucozade and Ribena brands. GSK and GSK Nigeria have commenced work towards the formalisation of updated long-term arrangements that would allow GSK Nigeria to continue to distribute these brands in Nigeria and certain countries in West Africa.'

Meanwhile, shareholders have described the development as a victory for investors and the Nigerian economy.

Those who spoke to our correspondent expressed the belief that had the proposal been approved, GSK Nigeria would have been delisted.

President, Progressive Shareholders Association, Mr. Boniface Okezie, said the plan amounted to an attempt to defraud Nigerians, stressing that its withdrawal was welcome.

He said, 'We cannot allow that to happen anymore in this country and those who opposed it should be commended.'

While praising the regulators for listening to 'the voice of reason', he stressed that there was the need for the government to protect the weak (minority shareholders).

Okezie, who argued that since the products of the company were produced in Nigeria and purchased by Nigerians, said it was wrong to prevent Nigerians from benefiting from the company.