The planned transfer of Bangladeshi GSK’s lion shares likely to happen before June
The closure of GlaxoSmithKline Bangladesh Limited's pharmaceutical plant in 2018 has proved to be very rewarding for the company and its shareholders.
The locally listed multinational company recently has posted all-time high earnings per share of Tk81.83 for the year ended in December 2019, against per share net loss of Tk52.75 in 2018.
Its net asset value per share has increased to TK132 from Tk104 a year ago.
Yet, the company has announced 530 percent cash dividends this year, unchanged from that of the previous year.
Masud Khan, Chairman of GSK BD told The Business Standard that the pharmaceutical unit was running at losses, despite its strict commitment to quality and compliances.
The annual earnings this year made it clear that shutting the plant was a wise decision for the company and its shareholders, he said.
The Pharma business was dragging the company down through eating away some of the profits from GSK's winning health food drinks businesses, he added.
In the disclosure at the Dhaka Stock Exchange on Monday, GSK BD explained its significant deviation in its annual earnings.
It attributed the previous year's loss on its costs incurred for severance payments to outgoing employees of the pharmaceutical unit and the costs for decommissioning of the plant.
This year the impact of the discontinued business was minimal.
Besides, in 2019 the company went through several cost saving activities that helped it to achieve the desired level of earnings, the company said in stock exchange filing.
GSK BD is a company of around 150 permanent employees now and the number of total employees was over a thousand before the Pharma plant closure.
The ownership transfer deal
Meanwhile, in December, 2018 Anglo-Dutch consumer products multinational Unilever and British multinational pharmaceutical group GlaxoSmithKline entered into a $3.8 billion deal which would let Unilever to buyout GSK's health food drinks business globally.
The deal includes merger or share transfer from GSK entities near two dozen markets, predominantly in Asia.
India, which is the major market for GSK health food drinks Horlicks and Boost, and Bangladesh is also the part of the deal.
GSK, reportedly to utilise the deal proceeds in investing more for its potential business of specialised oral care products like Sensodyne toothpaste.
As a part of the global deal, Indian relevant subsidiaries of both the group are in a process of merger and amalgamation through a share exchange scheme.
Unilever parent company is also in a process to buyout GSK BD's around 82 percent shares from the European holding company of GSK BD at around Tk1,650 crore.
In condition of anonymity, two officials at Unilever and GSK at Bangladesh told The Business Standard that the planned transfer of Bangladeshi GSK's lion shares will take place in the first half of this year.
The merger and amalgamation process of Hindustan Unilever and GSK Consumer Healthcare India is also expected to be completed within a few weeks.
GSK Bangladesh in coming days
At present, Horlicks contributes to around 93 percent of GSK BD's annual sales. And the rest comes from mainly Sensodyne toothpaste, though there are some minor products like over the counter antacid brand Eno.
As the core business of GSK in Bangladesh is being sold to Unilever parent company, the two groups preferred an acquisition here.
After GSK BD's 82 percent shares transferred to the Unilever, the listed company may go through a name change.
However, the new name will reflect the nature of the business – a consumer food company.
The other minority products of GSK BD – glucose drinks, toothpaste, and imported pharmaceuticals products – will be under a separate trading company.
That company will be run by parent GSK or any of its regional entities. And that company will not have any connection with the listed company, hinted the officials.
It means the listed company is going to lose all other products except health food drinks.
That also might be a concern for minority shareholders of GSK BD, said an equity analyst at a top brokerage firm.
However, Unilever has its global edge and a wide portfolio in consumer food and refreshment business and they are capable of taking the listed company far ahead, argued a senior company executive while talking to The Business Standard, in condition of anonymity as he was not entitled to talk to media.