GSK Nigeria gets shareholders approval to divest drinks business for $79.2m

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GSK Nigeria gets shareholders approval to divest drinks business for $79.2m

The shareholders of GlaxoSmithKline Consumer Nigeria Plc approved the company’s plan to sell its business to Suntory Beverage and Foods Ltd for 79.2 million dollars (N15.7 billion) to concentrate on its core business of healthcare.

The shareholders gave the approval on Monday at the company’s 2015 Annual General Meeting (AGM) and EGM in Lagos.

The transaction included the sale of the company’s Agbara manufacturing facility for drinks business and a 6.45 hectares of land.

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The company is to retain 3.45 hectares of the land to enable it invest and grow the retained GSK consumer business.

Mr Edmund Onuzo, the company’s Chairman, while addressing the shareholders,, said that a special dividend of N716 million, translating to 60k per share would be paid to shareholders upon completion of the transaction.

Onuzo said that the company would retain the production equipment used in the GSK consumer business and would lease from Suntory those areas of the Agbara facility which were used in the production of products for the GSK business.

According to him, the company will provide IT and ‘certain other transitional services’ to Suntory for a short period for smooth transition.

He explained that the transaction would enable the company to focus more on growing the GSK consumer business.

“Our parent company decided not to get involved in drink business but to focus on healthcare and we see it that it is easy for us to align on their strategy.

“Suntory is a japanese company and the third largest drink company in the world.

“We believe they have come to stay in Nigeria and the desire to quickly bring in their own brand underscores that fact,” he stated.

Onuzo said that the proceeds would be invested in the construction of a multi purpose facility to support the business and help maintain low cost but quality supply base.

He added that part of the fund would be used to reduce the firm’s foreign currency denominated indebted and to provide optimal returns to shareholders.

While reacting to shareholders demand to increase their 60k special dividend, Onuzo said that the company needed to invest in the facility.

“We needed to invest on facility installation to quickly recover lost ground and grow faster than expected so that our turnover will grow while profit will be much better.

“There is a huge debt to be paid, aside costs arising from business. Bearing in mind also on the uncertainty of the future, there is no way we will increase the dividend.

“We have arrived at what we consider to be fair and equity to enable us preserve the business for tomorrow. The board considers the future before going into this arrangement,” he explained.

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