GSK dispute showcases shareholder power


“Well first of all there is nothing wrong with what GSK is trying to do – they have to get their shareholders to agree to it. I think what is happening now is you’re having shareholders being a lot more aware of their rights and exercising those rights,” Higo, the managing director at Capital Bancorp told CNBC Africa on Monday.

GlaxoSmithKline (GSK) was forced to drop its scheme to raise its stake in the Nigerian unit following opposition from minority shareholders.

The plan would have seen GSK increase its indirect ownership in the unit from 46 per cent to 75 per cent by buying shares in GSK Nigeria from existing investors.


It’s an unwanted hindrance for the global health company, which is also currently battling a corruption scandal in China.

“It’s happened in the market, other companies have done it so it’s nothing new. I think the issues are surrounding whether or not the majority shareholders should have a vote at the court ordered meeting and the price at which the transaction will be done,” added Higo.

GSK has still hoped to implement the proposal by means of a tender offer. Following the complaints, the Securities and Exchange Commission (SEC) stepped in by declaring that the price be reviewed upwards and that GSK UK be barred from voting at the meeting.

“I understand that the pushback was also from foreign portfolio investors so that’s good for the market. It’s for the minority shareholders and the other shareholders to agree. I’m sure the SEC will ensure the minority shareholders are sorted out,” said Higo.

“I’m sure if it’s not done tomorrow, in the foreseeable future it will be done. I think the fact that they want to go to 75 per cent and invest more and turn Nigeria into a research hub, I think the stock has good potential,” he concluded.