Talk about the deal pushed Glaxo’s shares to the list of high shares on the Egyptian Stock Exchange over two sessions, to rise by 27.1%, amid analysts ’expectations that the deal would be completed during the first half of the year, and the occurrence of similar acquisition deals between companies investing in the Egyptian market during the current year.
In a disclosure to the Egyptian Stock Exchange, on Wednesday, GlaxoSmithKline announced the approval of the Board of Directors to enable “Hekma Pharma” and its consultants to carry out due diligence checks, after announcing yesterday that Glaxo Group Ltd. (the main shareholder) signed a non-binding basic conditions memorandum with Hikma. Pharma Technologies PLC, for the potential acquisition of the major shareholder in GlaxoSmithKline, of 91.2%, by submitting a compulsory purchase offer of 100% of the company’s entire shares.
The health sector analyst at Beltone Investment Bank, Ali Adel, said that the acquisition offer made to buy the share of the main shareholder in GlaxoSmithKline confirms that there is still strong interest in the pharmaceutical sector in the Egyptian market, despite the repercussions of the Corona pandemic, after the sector witnessed many similar offers last year, The deal is expected to be completed during the first half of 2021, following the completion of the due diligence examination and evaluation by Glaxo.
Adel explained that Glasgow Smithkline is one of the top 5 pharmaceutical companies in Egypt, with total sales reaching 3.6 billion pounds in the last 11 months of 2020, while Hikma Pharma is ranked eighth in terms of sales in the Egyptian market, so the purpose of the deal is Doubling its production area and placing it in an advanced position in light of the growth of the pharmaceutical market due to population growth.
Adel indicated, in exclusive statements to CNN in Arabic, that the offer submitted by “Hikmah Pharma” includes the acquisition of Glasgow Smithkline’s assets, which include its own factories and not the drugs it manufactures. The latter is likely to continue its activities through agents, import operations and cooperation with a number of From manufacturers in domestic pharmaceutical manufacturing.
And on the impact of the purchase offer on the stock of GlaxoSmithKline in the Egyptian Stock Exchange, the health sector analyst indicated that it rose by about 30% during the past two sessions, expecting it to continue to rise amid news of a high price for the deal’s value, in addition to the positive impact on the shares of listed pharmaceutical companies with the emergence of the deal’s evaluation. According to “Adel”.
For his part, Chairman of the Board of Directors of “Consult” for Healthcare Management and Consulting, Dr. Khaled Samir, said that Hikma Pharma’s bid to acquire GlaxoSmithKline Egypt aims to transform the first into a regional company in the pharmaceutical market, especially as it is the largest producer of cancer drugs in Egypt, indicating that the global trend is towards integration with the repercussions of the current pandemic.
“Samir”, in exclusive statements to CNN in Arabic, expected a similar acquisition among the companies investing in the pharmaceutical market in the country during the current year due to the Corona pandemic, which imposed the need for huge budgets for companies to face such challenges.
“Samir” explained that the existence of small companies that do not have sufficient financing is dangerous, but he linked the achievement of any acquisitions or merger with the Law of the Competition Protection Authority and confronting monopolistic practices, which would encourage or limit those operations.
According to Glaxo’s latest financial results, the company achieved sales of 1.42 billion pounds during the period from January to September 2020 compared to 1.19 billion pounds during the same period of 2019.
The net profit was 101.4 million pounds during the first 9 months of 2020, compared to 67.03 million pounds during the same period last year.
Financial analyst Ihab Rashad, Vice Chairman of the Board of Directors of Mubasher Capital Holding for Financial Investments, said that the purchase offer submitted to acquire GlaxoSmithKline does not mean the exit of foreign companies from the Egyptian market, “because it is the acquisition of a foreign company by a foreign company.
However, “Rashad” believed that the deal raises several questions about whether Al-Hikma upon its merger or acquisition of Glasgow will remain listed on the Egyptian Stock Exchange, or whether it will submit a compulsory purchase offer and acquire the remaining shares of shareholders and delist from the stock exchange, as well as whether the acquisition includes Glaxo factories. Or the medicines that you make as well.
Rashad added, in his statements to CNN in Arabic, that due diligence checks will determine the value of the deal and the share price of GlaxoSmithKline, which includes the appointment of a legal advisor, an auditor, and a financial advisor who evaluates the final price of the deal, for each party according to the terms of the seller and the buyer, as it may be sufficient to appoint Financial advisor to the buyer only, and in the event that an unsatisfactory price is evaluated to the seller, the latter will appoint a financial advisor.
On the impact of the announcement of the potential acquisition deal on the share price, he explained that any acquisitions of any company lead to a large movement of activity even if there is not enough information about the deal, as well as rumors, especially those related to valuations higher or lower than the value of the announced deal.