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Aspen Phamacare buys GlaxoSmithKline OTC products for $263 million
DURBAN, South Africa—British pharma giant GlaxoSmithKline (GSK) recently reached an agreement with Aspen Pharmacare Holdings Ltd. whereby Aspen Pharmacare will acquire a portfolio of established over-the-counter (OTC) products in selected territories including South Africa, Australia and Brazil, for £164 million, or the equivalent of about $263 million in U.S. currency.
The sale is the latest in a series of moves by GSK to refine the consumer healthcare aspect of it business and follows GSK's divestment of other OTC brands in North America and Europe. GSK had first publicly noted in February 2011 that it would be offloading non-core brands sold primarily in North America and Europe that make up about 10 percent of its consumer health portfolio. The ultimate aim is to focus on priority brands and emerging markets, GSK has said.
Two transactions comprise the total deal. First, there is the acquisition by Aspen Holdings of the products sold in the territories of South Africa, Namibia, Botswana, Swaziland, Lesotho, Zambia and Zimbabwe for £20 million. Second, there is the acquisition by Aspen Global Inc., a wholly owned subsidiary of Aspen Holdings incorporated in Mauritius, of the products sold in the rest of the world, but excluding the territories of North America and Europe—which are the subject of separate transactions concluded between GSK and third parties—for £144 million.
"The products acquired through these transactions are an excellent geographic fit with Aspen's existing footprint and will allow for significant strengthening of Aspen's OTC offering in all of the territories concerned," said Stephen Saad, Aspen Group's chief executive. "The products have considerable established brand equity, which Aspen intends to leverage through increased promotion and plans to expand through line extensions. The transactions will also provide impetus in territories where Aspen is seeking to grow critical mass such as Latin America and South East Asia."
The South African part of the transaction is subject to various conditions before it closes officially, including the approval of the South African competition authorities and the approval of the Financial Surveillance Department of the South African Reserve Bank. In addition, the Southern Africa transaction with respect to Namibia and Swaziland is subject to and conditional upon the approval of the respective competition authorities in those countries.
The transaction as it concerns the rest of the world is "unconditional" Aspen says, and is effective from May 1. The exceptions that unconditional approval are:
The transactions will be funded from existing cash resources, existing credit facilities and new debt, the latter funding approximately half of the transaction. Arrangements for the raising of the new debt have been finalized, Aspen says.
The main areas of therapeutic treatment for the OTC products being acquired are analgesic, gastrointestinal and respiratory. Other areas covered include dermatology, infant care, vitamins and minerals. The leading products are recognized household brands such as Phillips Milk of Magnesia, Dequadin, Solpadeine, Cartia, Zantac and Borstol. Aspen expects the transactions to be earnings accretive from the outset.