GlaxoSmithKline Consumer Nigeria Plc, a unit of the U.K.’s biggest drugmaker, declined the most in more than nine years on speculation its parent won’t be forced to increase an offer to raise its stake in the business.
The stock declined 10 percent to 60.30 naira by the close in Lagos, the commercial capital, the biggest drop since April 2004. About 232,000 shares traded, equal to 98 percent of the three-month daily average volume.
GlaxoSmithKline Plc agreed with its Nigerian unit in November to raise its holding to 80 percent from 46.4 percent, paying 48 naira each for the shares. In a statement dated June 24, the company put the new size of its holding at 75 percent and said a meeting will be held on July 23 on the deal. The stock was trading at 37.51 naira before London-based Glaxo announced its intention to buy more shares.
The Abuja-based Securities and Exchange Commission won’t be involved in determining the price, Yakubu Olaleye, a spokesman, said by phone. “The SEC will just insist on full disclosure on how the price was arrived at,” he said.
No one answered a call made to GSK Consumer’s office in Lagos today. Traders bought the shares after the November announcement on speculation that they were worth more than offered at the time, David Adonri, chief executive officer of Lagos-based Lambeth Trust and Investment Co., said by phone.
“Many investors sold their shares today on speculation the SEC or any other body won’t bargain higher price for investors, even as the company’s shares rise,” he said today.
The selloff was spurred by buyers factoring in losses expected from the gap between current share price and the proposed buying price of 48 naira, Pabina Yinkere, head of research at Lagos-based Vetiva Capital Management Ltd., said by phone.
The Nigerian company’s shares have surged 34 percent this year, in line with 32 percent for the Nigerian Stock Exchange All-Share Index.