Employees at GlaxoSmithKline (GSK) Consumer Nigeria will lose their jobs this year, as the company has announced that it will shut down operations.
GlaxoSmithKline Consumer Nigeria said it failed to retain the approval for the distribution of vaccines and medicines produced by GlaxoSmithKline UK Group.
The firm was the sole distributor of drugs produced by GlaxoSmithKline UK, but the foreign manufacturer has chosen to appoint a different local distributor.
This was disclosed in a statement released on Thursday to the Nigerian Exchange Limited (NGX), the stock market authority.
GSK Nigeria said the decision by the UK drugmaker makes it impossible for the Nigerian company to continue operations going forward.
“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 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,” the statement reads.
To affect employees, shareholders
With job losses expected, GSK Nigeria, in the statement, said its employees will be treated fairly as it prepares to cease operation.
“Today we are briefing our employees whom we will treat fairly, respectfully and with care, meeting all applicable legal and consultation requirements,” the company said.
Although GlaxoSmithKline Consumer Nigeria didn’t reveal the timeframe for the final shutdown, the company said it will seek approval from the Securities and Exchange Commission (SEC) to complete the discontinuation of its business.
Shareholders will receive cash for their investments in GSK Nigeria. Also, the firm warned that investors in the stock market should trade with caution when dealing with GSK Nigeria’s shares.
“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,” GSK Nigeria warned.
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