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GSK Acquires 19% Stake In Aspen - Update

Drug major GlaxoSmithKline plc (GSK) said Tuesday that it has acquired a 19% stake in South African based generic drug maker Aspen Pharmacare Holdings Limited (APNHF.PK). This is part of an agreement including combining commercial activities in Sub-Saharan Africa.

Under the terms of the deal, Aspen issued 68.5 million ordinary shares to GSK for the transfer of certain assets. Taken together with Aspen shares acquired by GSK between signing and closing, this issue increases GSK's holding in Aspen to a total of 81.7 million shares, the equivalent of a 19% shareholding.

GSK said Abbas Hussain, President Emerging Markets, GlaxoSmithKline will be appointed to Aspen's Board as a non-executive director with effect from December 7.

In May, GSK had agreed to acquire a 16% stake in Aspen Pharmacare in exchange for transfer of specialist products and a manufacturing facility in Bad Oldesloe, Germany that makes some of the products to be divested and a number of other products previously acquired by Aspen from GSK in June 2008.

GSK also agreed to divest eight specialist medicines, which include Alkeran (excluding US), Kemadrin, Lanvis, Leukeran, Myleran, Purinethol, Septrin and Trandate, to Aspen.

GSK then said it expected to record one-off non-cash, pre-tax profit on the expected closure of the transaction, which would be the profit on disposal of assets to Aspen. GSK added that it expected the transaction to be accretive to its earnings per share in 2009 and slightly dilutive in 2010.

GSK is targeting branded generics in emerging markets. Early July, GSK said it acquired the branded generics business of Bristol Myers Squibb (BMY) in Lebanon, Jordan, Syria, Libya and Yemen for a cash consideration of $23.2 million or GBP 14.2 million. In 2008, GSK acquired from Bristol Myers Squibb businesses in Pakistan and Egypt, including a high quality manufacturing plant in Giza, Greater Cairo.

In June this year, GSK signed a partnership deal with India-based Dr. Reddy's Laboratories (RDY) to gain immediate access to Dr. Reddy's portfolio and future pipeline of more than 100 branded pharmaceuticals in therapeutic segments. Under the agreement, Dr. Reddy's would manufacture the products and the same would be licensed and supplied to GSK in various emerging markets such as Africa, the Middle East, Latin America and Asia Pacific excluding India.

In LSE GSK is currently up 16 pence and trades at 1273 pence. In NYSE GSK closed Monday's regular trading at $41.47.

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