The Britain-based GlaxoSmithKline Plc's voluntary open offer to the shareholders of its Indian subsidiary GlaxoSmithKline Pharmaceuticals (GSK Pharma) is scheduled to start on Tuesday.
The global healthcare major plans to invest Rs 6,390 crore to raise its stake in its Indian subsidiary to 75 per cent from the existing 50.67 per cent.
GlaxoSmithKline Pte. Ltd. along with GlaxoSmithKline Plc plans to acquire up to 2.06 crore shares of GSK Pharma at Rs.3,100 per share. The open offer begins Feb 18 and will close March 5, 2014.
According to most analysts, the open offer is attractive and investors should take this opportunity to exit.
Mumbai-based Dinker Shanbhag, who heads Institutional Equities at Lotus Global Equities says, "The offer by the parent company for GSK Pharma is attractively priced and investors should take this opportunity and tender their shares."
"The open offer comes in a time when the company's performance has shown a downfall on account of new pharmaceutical pricing policy, rising competition, higher input cost and INR depreciation," he added.
The offer price of Rs 3,100 per share is at a premium of 26 per cent to the closing price of GSK Pharma before the offer was announced. The open offer was announced on Dec 16, 2013.
Analysts are concerned over the new pharmaceutical policy which could impact GSK Pharma more than any other pharma player in India.
According to Macquarie Capital Securities (India) report unveiled after the open offer announcement, the National Pharmaceutical Pricing Policy impacts GSK the most due to the premium pricing GSK brands enjoy.
Over 28 per cent of GSK's current sales come under National List of Essential Medicines (NELM). Augmentin - one of GSK's biggest antibiotic brands alone could be impacted by Rs 40 crore.