GlaxoSmithKline (GSK) Consumer Nigeria Plc on Thursday disclosed that it will shut down its production line in Nigeria due to unfavourable economic situation.
The company said it plans to stop operations after evaluating the options for moving to a third-party distribution model for its pharmaceutical products.
The company is well-known for its products such as Augmentin, Neosporin, Panadol, Sensodyne, Advair, Ventolin, Theraflu, among others.
GSK Nigeria announced the development in a statement sent to the Nigeria Exchange Limited (NGX) on Thursday and signed by Frederick Ichekwai, the company secretary.
The company said it is working with its advisers to agree on next steps and plans to submit a scheme of arrangement to the Securities and Exchange Commission (SEC), which if approved, will see it return cash to shareholders except its parent company, GSK UK.
The company, which employs over 290 people, assured that all necessary legal proceedings would be met as regards employees and shareholders.
‘In our published Q2 results we disclosed that the GSK UK Group has informed GlaxoSmithKline Consumer Nigeria PLC of its strategic intent to cease commercialization of its prescription medicines and vaccines in Nigeria through the GSK local operating companies and transition to a third-party direct distribution model for its pharmaceutical products,” the statement reads.
“The Haleon Group has also separately informed the Board of its intent to terminate its distribution agreement in the coming months and to appoint a third-party distributor in Nigeria for the supply of its consumer healthcare products.
“For the above reasons, and having, together with GSK UK, evaluated various other options, the Board of GlaxoSmithKline Consumer Nigeria Plc has concluded that there is no alternative but to cease operations.
“Today we are briefing our employees whom we will treat fairly, respectfully and with care, meeting all applicable legal and consultation requirements.
“The Board is conscious that shareholders will have many questions; we have been working assiduously with our professional advisors to agree on next steps and we will be shortly submitting to the Securities and Exchange Commission (“SEC”) a draft Scheme of Arrangement which may, if approved, see shareholders other than GSK UK, receive an accelerated cash distribution and return of capital.
“The Board acknowledges the support of the GSK Group in its intentions to make this possible, full details of which we hope to publish shortly. In the meantime, however, we cannot give you assurance of the final terms of any scheme, or that any scheme will be approved by the SEC or by shareholders.
“Shareholders are advised to seek professional advice and continue to exercise caution when dealing in the company’s shares until a further announcement is made.”