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* GSK cashes in after 2018 Horlicks divestment
* Sells 5.7% stake in Unilever's India business
* GSK had folded Horlicks unit into Hindustan Unilever
(Adds details of share sale)
By Scott Murdoch and Anshuman Daga
HONG KONG/SINGAPORE, May 7 (Reuters) - GlaxoSmithKline
said on Thursday it sold its stake in Unilever's
Indian business for $3.35 billion, which
Refinitiv says is the largest block trade ever to have been
carried out in India.
The funds will help GSK in its goal of reinvigorating its
drug development pipeline, having made costly bets on
experimental cancer treatments and future cell and gene
therapies amid sluggish revenue growth.
The 5.7% stake in Hindustan Unilever was accepted by GSK as
payment for the sale of its malted drink brand and other
nutrition brands to Unilever, agreed in late 2018.
The 133.77 million shares were offloaded on average for
1,905 rupees, according to a statement from GlaxoSmithKline.
Potential investors were earlier told the shares would be
sold in a range of 1,850 to 1,950 rupees, which was a
3%-8%discount to Wednesday's closing price of 2,010.20 rupees.
In the statement, GSK said it would now receive net proceeds
from the Horlicks divestment of 2.9 billion pounds ($3.59
billion), up from its original expectation of 2.4 billion
pounds.
It said the recent Hindustan Unilever share price gains led
to the better than expected outcome.
The deal, at $3.35 billion, eclipses the previous block
trade record in India when Daiichi Sankyo sold its $3.18
billion stake in Sun Pharmaceuticals in April 2015,
according to Refinitiv.
On a global basis, the Glaxo block trade will be the 10th
ever biggest, according to the data provider.
The largest ever block trade remains Naspers
selling $9.8 billion worth of Tencent stock in Hong
Kong in March 2018.
MORE DIVESTMENTS
GSK's decision could also inject some momentum into India's
equity capital markets which have struggled in line with other
major financial markets as a result of the coronavirus pandemic.
There has been $6 billion worth of equity capital market
deals in India so far in 2020, down from $8.52 billion during
the same time list year, according to Refinitiv.
The data showed the rate of activity in 2020 is the slowest
since 2017.
In comparison, Hong Kong’s equity capital markets have seen
$12.8 billion worth of activity this year.
GSK struck a deal in 2018 to fold its Indian business -
whose main product is Horlicks - into Unilever's Indian unit
Hindustan Unilever in exchange for shares in the combined group.
According to GSK's first-quarter report, it completed the
Horlicks deal on April 1, receiving the 5.7% equity stake in
Hindustan Unilever plus about 400 million pounds in cash.
Earlier this year, GSK launched a two-year programme to
split into two entities, separating the core prescription drugs
and vaccines business from an enlarged over-the-counter products
business that was merged with a Pfizer unit.
It is considering more divestments to fund the costs of the
separation.
Having sold travel vaccines to Bavarian Nordic for
up to 955 million euros ($1.03 billion)in October last year, the
British group is looking into shedding more assets, starting
with a review of its prescription dermatology business with
about 200-300 million pounds in annual sales.
($1 = 0.8074 pounds)
($1 = 0.9260 euros)
(Additional reporting by Sumeet Chatterjee in Hong Kong.
Writing Ludwig Burger)
