GlaxoSmithKline Plc is likely to raise stake in its Indian arm to 51 per cent through a buyback plan. At present, the Indian arm, GlaxoSmithKline Consumer Healthcare (GCHL), is an associate company of the global pharma and health care drink major.
The board of directors of GCHL will meet on December 10 to discuss the buyback plan. GlaxoSmithKline Plc holds 40 per cent in GCHL through a wholly-owned special purpose vehicle, Horlicks Ltd.
GCHL, the nutritional drink major, commands over 70 per cent share of the health care drink market in India. It owns brands like Horlicks, Boost, Viva and Maltova, besides manufacturing over-the-counter drugs like Crocin and Eno. It acquired Viva and Maltova from Jagjit Industries in 2000.
Market sources said GCHL’s parent could go for a 20 per cent buyback. According to market experts, GlaxoSmithKline Plc can acquire 51 per cent in the Indian arm if it goes for a 20 per cent buyback. A GCHL executive, however, declined to comment on the size of the buyback.
Incidentally, of the 4.5 crore equity shares in GCHL, Horlicks Ltd holds around 18.1 million. According to market experts, a 20 per cent buyback means around 9 million shares will be snapped up leading to promoters’ holding going up to 36 million shares — well over the 51 per cent mark.
The shares of GCHL are widely held, with the public holding around 21 per cent, LIC and GIC around 18 per cent and FIIs holding around 7.5 per cent. The GCHL counter saw brisk activity in last few days, with the scrip rising to Rs 320 from Rs 290.