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The Bangladesh Securities and Exchange Commission has widened areas of inquiry into the acquisition of GSK Bangladesh by Unilever, BSEC officials said.
The securities regulator in November 2020 began an inquiry into the process of the acquisition deal.
BSEC officials said that the commission had recently observed that Unilever Consumer Care Limited, previously GSK Bangladesh, was substantially a reduced form of GSK following discontinuance of pharmaceutical segment and segregation of high selling products, including Sensodyne and Eno.
Despite a huge asset divestment, the shares of GSK Bangladesh were brought at whopping Tk 2,046 each by Unilever Group that raised question, the officials said.
The BSEC on March 10, 2021 sent a letter to GSK Bangladesh regarding the issues and sought explanation within seven working days.
On June 28 2020, Unilever Overseas Holdings BV acquired 81.98 per cent share of GSK Bangladesh from SETFIRST Limited UK, a special purpose vehicle of GSK UK, for Tk 2,020.45 crore.
On July 2, the name of GSK Bangladesh was changed to Unilever Consumer Care Limited.
Copies of the letter were forwarded to finance ministry, Bangladesh Financial Intelligence Unit and National Board of Revenue.
The BSEC in the letter said, ‘The company has made no new investments but divested its property, plant and equipment (PPE) as cash investments were alarmingly at Tk 3.2 crore over the period of 2018 to 2020.’
‘The fair value of net identifiable assets of UCCL is obviously a fraction of the erstwhile GSK (Bangladesh) Limited,’ the BSEC said.
The company’s operating assets plunged from Tk 268 crore in 2017 to Tk 66 crore in 2020, turnover Tk 680 crore in 2017 to around Tk 300 crore in 2020, and the measure of free cash flows decreased from Tk 233 crore in 2018 to Tk 44 crore in 2020.
‘This clearly indicates that UCCL is substantially a reduced form of GSK,’ it said.
‘Not only did pharmaceutical products, that comprised major business segment, were discontinued, two other products are now separately produced and marketed by a new subsidiary of GSK Group. UCCL is thus only a part of the erstwhile GSK (Bangladesh) Limited.’
GSK Group formed a new subsidiary, called Burroughs Wellcome and Company (BD) Limited, in order to market Sensodyne and digestive health brand Eno.
Earlier on July 26, 2018, GSK Bangladesh announced the closure of its drug manufacturing unit in Bangladesh after six decades of operation.
The commission demanded a management’s explanation of evolving key financial indicators.
UCCL in a statement to New Age said, ‘We have not received any such queries from the BSEC as of now. If we receive any such letter, we will provide our response to the BSEC in due time.’
‘Also, any communication between the BSEC and the industry is confidential in nature and UCCL is under obligation to maintain confidentiality,’ it said.
GSK’s brands Horlicks, Boost, and Glaxose-D are now the brands of UCCL, it said.
The BSEC also asked the company to submit sales and purchase agreement of the acquisition to look into the provisions concerning, discontinuance of pharmaceutical business, and divestment of intangibles including brands and other intellectual properties of GSK.
