Aspen Phamacare buys GlaxoSmithKline OTC products for $263 million

Acquisition is for selected territories, including South Africa, Australia and Brazil but excludes North American and Europe

Jeffrey Bouley
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DURBAN, South Africa—British pharma giant GlaxoSmithKline(GSK) recently reached an agreement with Aspen Pharmacare Holdings Ltd. wherebyAspen 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 GSKto refine the consumer healthcare aspect of it business and follows GSK'sdivestment of other OTC brands in North America and Europe. GSK had firstpublicly noted in February 2011 that it would be offloading non-core brands soldprimarily in North America and Europe that make up about 10 percent of itsconsumer health portfolio. The ultimate aim is to focus on priority brands andemerging markets, GSK has said.
Two transactions comprise the total deal. First,there is the acquisition by Aspen Holdings of the products sold in theterritories of South Africa, Namibia, Botswana, Swaziland, Lesotho, Zambia andZimbabwe for £20 million. Second, there is the acquisition by Aspen Global Inc.,a wholly owned subsidiary of Aspen Holdings incorporated in Mauritius, of theproducts sold in the rest of the world, but excluding the territories of NorthAmerica and Europe—which are the subject of separate transactions concludedbetween GSK and third parties—for £144 million.
"The products acquired through these transactionsare an excellent geographic fit with Aspen's existing footprint and will allowfor significant strengthening of Aspen's OTC offering in all of the territoriesconcerned," said Stephen Saad, Aspen Group's chief executive. "The productshave considerable established brand equity, which Aspen intends to leveragethrough increased promotion and plans to expand through line extensions. Thetransactions will also provide impetus in territories where Aspen is seeking togrow critical mass such as Latin America and South East Asia."
The South African part of the transaction issubject to various conditions before it closes officially, including theapproval of the South African competition authorities and the approval of theFinancial Surveillance Department of the South African Reserve Bank. Inaddition, the Southern Africa transaction with respect to Namibia and Swazilandis subject to and conditional upon the approval of the respective competitionauthorities in those countries.
The transaction as it concerns the rest of theworld is "unconditional" Aspen says, and is effective from May 1. Theexceptions that unconditional approval are: 
  • Zantac as marketed, distributed and sold inAustralia and New Zealand, which is subject to the approval of the Australiancompetition authorities
  • The parts of the transaction relating to Kenyaand Tanzania, which is subject to the approval of the competition authoritiesin those two nations
The transactions will be funded from existing cashresources, existing credit facilities and new debt, the latter fundingapproximately half of the transaction. Arrangements for the raising of the newdebt have been finalized, Aspen says.
The main areas of therapeutic treatment for the OTCproducts being acquired are analgesic, gastrointestinal and respiratory. Otherareas covered include dermatology, infant care, vitamins and minerals. Theleading products are recognized household brands such as Phillips Milk ofMagnesia, Dequadin, Solpadeine, Cartia, Zantac and Borstol. Aspen expects thetransactions to be earnings accretive from the outset.

Jeffrey Bouley

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