Aspen to bide its time post-GSK

Confirms disposal of stake

BRANDED and generic pharmaceutical products group Aspen Pharmacare Holdings was unlikely to look for an investor in the mould of global pharmaceutical group GlaxoSmithKline (GSK), which had disposed of its remaining stake in Aspen, a South African analyst said yesterday.

Aspen, the largest pharmaceutical company listed on the JSE, confirmed yesterday that GSK on Wednesday had offloaded the remaining 6.2 percent interest in the company.

The disposal translates to 28.2 million ordinary shares after GSK sold the shares to institutional investors for R300 a share or R8.47 billion.

Aspen has a market capitalisation of about $10bn (R14bn).

Divesting

GSK started divesting its stake in Aspen in November 2013 when it sold 28.2 million shares for about R7bn.

Last year it sold the same number of shares through institutional investors for R372 a share, raising R10.5bn.

GSK, which had a stake in Aspen since 2009, felt it was the right time to move on but said the decision should not cast Aspen in a negative light.

Shmuel Simpson, a 36ONE Asset Management investment analyst, said yesterday that the move was expected.

Simpson said GSK’s decision to dispose of the interest should not reflect badly on Aspen.

“It is more about GSK wanting to redeploy capital elsewhere,” he said.

GSK’s so-called strategy of simplification entails focusing on core therapeutic areas.

Simpson said the sale should be somewhat of a relief to Aspen shareholders. “It was an overhang for a while.”

“The market assumed a placement was coming, it was only a question of when,” Simpson said.

He said Aspen was unlikely to look for an investor similar to GSK.

“They have a strong and diverse investor base and do not require a core investor of the likes of GSK,” Simpson said.

Aspen said the disposal would not affect the ongoing collaboration and trading relationships between the two companies in South Africa.

David Redfern, GSK’s chief strategy officer, would remain a member of the Aspen board of directors, Aspen said.

Relationship

Group chief executive Stephen Saad said the two companies would maintain their relationship.

“We are pleased that Aspen shareholders are relieved of the uncertainty caused by GSK’s stated intention to dispose of its interests, which eliminates the overhang caused by this uncertainty,” Saad said.

GSK spokeswoman Aoife Pauley said the decision to sell the company’s remaining shares in Aspen was part of a desire to focus on core franchises and efficiently manage its balance sheet.

“We have been gradually reducing our holding since 2013 and now was the appropriate time to conclude that process and realise what has been a very successful investment for GSK,” Pauley said.

Aspen shares on the JSE were down 1.85percent at R311 yesterday.