VENTURES AFRICA – Investigations revealed that retail investors aim to profit from GlaxoSmithKline Plc share offerings, as the UK firm seeks to increase its stake in its Nigerian unit (GSK Nigeria).
The pharmaceutical company, in its quest to remain competitive in the West African nation, disclosed plans to increase its stake in its Nigerian company to 75 percent from its current 46 percent. It has however, opened share offerings at N48 per share (upon approval by regulators), well below Monday’s closing market value of N67.
And investors, citing a similar scenario to the Nigerian Bottling Company (NBC) deal, are eager to record gains from this offer.
Investigations reveal a 22 percent surge in the share price, which stood at N39.39 after the deal was announced back in November, leading to the company’s stock getting overbought.
The real losers from this fiasco are the current shareholders, who own shares valued at N67, reflecting a downside of about 28 percent from the N48 that the parent company is offering.
This has so far been perceived as “fraudulent and unfortunate” by stakeholders, and have called for the Securities and Exchange Commission (SEC) – the apex regulatory body – to review and restructure its regulations to allow for a clear guiding process in future transactions.
“If we need to achieve the NSE’s $1 trillion market cap target for 2016, the Nigerian market must adopt global best practices.” Jimi Ogbobine, a market analyst at Consolidated Discount Limited (CDL) told Business Day.
“Going forward, we need clear cut rules that govern situations like these.” He added.
According to Business Day, there are indications however, that the regulatory body may eventually seek an “arbitrage role” between all parties involved, a development which could see GSK Plc up its offer price to reflect current market valuations.