January 23, 2009 / 8:52 AM / 10 years ago

UPDATE 2-Glaxo buys UCB's emerging market activities

(Adds shares, analyst comment)

By Philip Blenkinsop

BRUSSELS, Jan 23 (Reuters) - The world’s second-largest pharmaceutical group GlaxoSmithKline Plc (GSK.L) has agreed to buy Belgian peer UCB’s (UCB.BR) operations in a number of emerging markets for 515 million euros ($667.2 million).

The two companies announced the cash deal on Friday for more than 50 operations in Africa, the Middle East, Asia Pacific and Latin America, but excluding Brazil, Russia, India, China, South Korea and Mexico and UCB’s new core products.

UCB shares shot up after the news and were trading 7.7 percent higher at 26.2250 euros at 0925 GMT. Glaxo was 1.7 percent higher at 12.62 pounds and the DJ Stoxx European healthcare index .SXDP was up 0.7 percent.

New Glaxo Chief Executive Andrew Witty has made emerging markets a priority, a pledge backed up in December by the group’s acquisition of Bristol-Myers Squibb Co’s (BMY.N) Pakistan operations.

Witty told a conference in New York earlier this month that he expected to make further acquisitions in 2009 to bolster its business in emerging markets.

Glaxo is seen also as a potential purchaser of South Africa’s Aspen Pharmacare Holdings (APNJ.J), after striking a ground-breaking deal with it in July to sell cheap branded generic medicines in emerging markets.

The UCB deal is expected to be completed in late March.

UCB described the activities Glaxo has agreed to buy as smaller markets for it, representing 3 to 4 percent of revenue, and said their sale would allow it to focus on key strategic areas.

UCB said the sale fitted in with its SHAPE programme launched last year, which will relocate resources to boost UCB’s specialist areas of the central nervous system and immunology.

The Belgian company repeated its forecast of a recurring EBITDA (earnings before interest, tax, depreciation and amortisation) this year of at least 650 million euros.

KBC Securities analyst Jan De Kerpel said the deal to divest non-core activities in non-core regions made sense and was at a decent four times the value of sales.

“That’s cash on the balance sheet, which is important because UCB has a substantial amount of debt,” he said.

The deal will mean Glaxo acquires rights to UCB brands such as epilepsy drug Keppra and allergy medicines Xyzal and Zyrtec.

However, it will not cover UCB’s newer products Cimzia, for Crohn’s disease and rheumatoid arthritis, Parkinson’s and restless leg syndrome drug Neupro and Vimpat for epilepsy. (Additional reporting by Anne Jolis and Ben Deighton in London; editing by Karen Foster)

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