Hostile Takeover: How shareholders scuttled Glaxo UK’s Plan to delist its Nigerian unit from the NSE

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The plan by Britain’s biggest drug maker GSK to increase its indirect ownership in GlaxoSmithKline Consumer Nigeria Plc a fortnight ago suffered a setback as the Nigerian shareholders of the company voted overwhelmingly against the move at a court-ordered meeting in Lagos, reports Festus Akanbi

As early as 8 am on wet Tuesday morning of July 23, scores of Nigerian shareholders had converged on Muson Centre, Onikan, Lagos venue of the court-ordered extra –ordinary meeting of GlaxoSmithKline Consumer Nigeria Plc.

And by 10 o’clock, the meeting venue had played host to hundreds of angry retail shareholders of the firm, who could not hide their opposition to the planned arrangement proposed to GSK Nigeria’s shareholders. It was a development that brought Nigerian shareholders from different shareholders’ associations together to fight a common cause.

Speaking in One Voice
It was therefore not a surprise when the shareholders voted overwhelmingly against the arrangement under which it was proposed that GSK would increase its indirect ownership in GSK Nigeria to 75 percent. The company had to bow to the popular wish of the Nigerian shareholders with an indefinite suspension of the plan.

The decision to abandon the scheme, which would have increased its indirect ownership in the unit to 75 percent, is a fresh setback for Britain’s biggest drug maker, which is said to be battling a corruption scandal in China. The company announced 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.

The Role of SEC
A source from the shareholders group told THISDAY that SEC was carried along in the battle prosecuted by the shareholders, explaining that the initial intervention of the regulatory body in fixing of share price for the tender offer was informed by shareholders complaint. Before the extra-ordinary general meeting, SEC had 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 came 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.

Like NBC, Like GSK
Minority shareholders, however, opposed the move, saying it was 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.

 

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