Glaxo to reap $890M as it halves stake in South Africa's Aspen

Less than a year and a half ago, GlaxoSmithKline ($GSK) decided to sell off a chunk of its stake in the fast-growing Aspen Pharmacare and reap the rewards from its investment. And now, it's doing the same thing again--this time with a larger piece.

The pharma giant is halving its stake in the South African drugmaker, a sale that's expected to generate around $890 million, Reuters reports. The company will conduct the sale through a share placing, and it'll offer a 5.3% to 10.2% discount to Aspen's closing price Thursday, a source told the news service.

The way Glaxo sees it, the move will give the company some financial flexibility in the wake of its multibillion-dollar asset swap with Novartis ($NVS), which sent GSK's oncology assets to Switzerland in exchange for most of the Basel-based company's vaccines portfolio.

GSK CFO Simon Dingemans

"As we continue to reshape the group around our core franchises and drive the benefits from the Novartis transaction, optimizing our financial flexibility to invest behind these priorities is key," company CFO Simon Dingemans said in a statement seen by Reuters.

It's not the first cash-out for Glaxo, which initially invested in Aspen in 2009 as part of a strategy to grow its emerging-markets footprint. In November 2013, after Aspen had grown by leaps and bounds, GSK said it would let go of up to 28.2 million shares, or about a third of its stake, for R7.54 billion ($741 million).

For now, though, it's hanging onto a 6.2% share in the pharma, which is seeking to snap up some overseas deals as it continues to grow. And Glaxo will be sitting tight for at least awhile: It's agreed not to sell any more shares for 180 days.

"We continue to believe in the strategy of Aspen and we remain committed to working together in the future," Dingemans said.

- get more from Reuters

Special Reports: Top 10 Drugmakers in Emerging Markets - GlaxoSmithKline | Top 10 generics makers by 2012 revenue - Aspen Pharmacare | Pharma's top 10 M&A deals of 2014 - GlaxoSmithKline Oncology/Novartis Vaccines (excluding flu)

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