Aspen Gains Most in 3 Years to Record on Glaxo Drugs Deal

Aspen Pharmacare Holdings Ltd. (APN) gained the most in almost three years after the southern hemisphere’s largest drugmaker said earnings will be boosted by the purchase of drug ranges from GlaxoSmithKline Plc. (GSK)

The stock of Johannesburg-based Aspen closed 5.9 percent higher, the most since June 2009, at 122.89 rand in Johannesburg, the highest since at least December 1990.

Aspen will pay 164 million pounds ($264 million) for various Glaxo over-the-counter brands in international markets, including South Africa, Australia and Brazil. The acquisition, half-funded by debt, would have added 5.5 percent to earnings per share for the six months through December if it had been included, the Durban-based company said in a statement today.

The products, which include Phillips Milk of Magnesia, Dequadin, Solpadeine, Zantac and Borstol, will “provide impetus in territories where Aspen is seeking to grow critical mass such as Latin America and South East Asia”, the company said.

Today’s sale marks a year since Glaxo announced plans to divest the brands. A person with knowledge of the sale said in April 2011 that the assets may sell for as much as 2 billion pounds. The total gross cash proceeds reached 981 million pounds, excluding Alli, Glaxo said today.

In December, Glaxo sold 17 brands including digestive helpers Beano and Gaviscon to New York-based Prestige Brands Holdings Inc. (PBH) for $660 million.

While Chief Financial Officer Simon Dingemans said in January that Alli was “not a definitive factor” in slowing down the sale, it is the only remaining product among the assets intended for disposal. Glaxo said today it still intends to sell the Alli rights.

The Alli diet pill contains orlistat, a chemical that blocks the intestines from absorbing fat when taken as often as three times a day with meals. Orlistat has been linked to reports of liver injury, prompting consumer groups to demand its removal from the market. The U.S. Food and Drug Administration announced new warnings on the pill’s label in mid-2010.

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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