GSD Goldshield Grp

RNS No 0370t
GOLDSHIELD GROUP PLC
7 July 1999

Proposed Acquisition of Product Licences and Trademarks from
SmithKline Beecham p.l.c.

Proposed Placing and Open Offer of 4,022,502 New Ordinary
Shares at 410p per Share

Goldshield  Group plc ("Goldshield" or the  "Company"),  the
profitable,  marketing-led, emerging British  pharmaceutical
company,  today announces:

The Proposed Acquisition

* The  proposed  acquisition  (the  "Acquisition")   of
  domestic and international pharmaceutical product licences,
  know-how, goodwill and trademarks from SmithKline  Beecham
  p.l.c.   ("SB")   for  ten  products  for   an   aggregate
  consideration  of #17.0 million of which #6.0  million  is
  payable  on  Completion. The balance of #11.0  million  is
  payable in two equal instalments, payable on the first and
  second anniversaries of Completion.
* The  initial instalment of the consideration  will  be
  funded  by  the  proceeds of the placing  and  open  offer
  (described  below). The balance of the  proceeds  will  be
  placed on deposit pending further acquisitions or use within
  the business.
* The Acquisition will provide the Group with:
     * an   increased  income  and  profit   inflow   both
       domestically and internationally;
     * an established presence in international markets;
     * a  platform  for  the  international  expansion  of
       Goldshields existing products; and
     * additional    opportunities   to    develop    the
       infrastructure   necessary   to   expand   Goldshields
       business in international markets.
     
The Placing and Open Offer

*  Under the Placing and Open Offer 4,022,502 New Ordinary
   Shares  are to be issued at 410p per share to raise  #15.6
   million (net of expenses).
* Qualifying  shareholders may apply  for  New  Ordinary
  Shares on a pro rata entitlement of 1 New Ordinary Share for
  every 8 Ordinary Shares.

Ajit Patel, Chairman and Chief Executive of Goldshield said
today:
"We  are  delighted to be able to announce the  Acquisition,
which represents a major opportunity to expand our business,
both  domestically and internationally.  We  are  also  very
pleased with the support we have received from institutional
investors for the related Placing and Open Offer."

Contact:

Goldshield Group plc                       0181 649 8500
Ajit Patel, Chairman & Chief Executive

Buchanan Communications                    0171 466 5000
Andy Yeo/Tom Gadsby

West LB Panmure                            0171 638 4010
Christopher Collins/Ronald Openshaw

SmithKline Beecham p.l.c.                  0181 975 2873
Alan Archer


Introduction

Goldshield  announces that it has entered into a conditional
agreement  with  SmithKline Beecham p.l.c. to  purchase  the
product  licences  and trademarks to certain  pharmaceutical
products  for  a  consideration  of  #17.0  million,  to  be
satisfied in cash. In view of the size of the Acquisition in
relation  to  the  size of Goldshield,  the  Acquisition  is
conditional  upon, inter alia, the approval of  Shareholders
at the EGM.

Goldshield  also  announces  that  it  proposes   to   raise
approximately  #15.6  million, net of  expenses,  through  a
Placing  and  Open  Offer of 4,022,502 New Ordinary  Shares,
which is being made at 410p per share. Under the Placing and
Open   Offer,  2,716,215  New  Ordinary  Shares  are   being
conditionally placed with institutional investors subject to
claw  back  at  the  Issue Price by Qualifying  Shareholders
under an Open Offer on the basis of 1 New Ordinary Share for
every  8  Ordinary Shares held on the Record  Date.  Certain
directors  have  irrevocably agreed not to make  application
for  their entitlement to New Ordinary Shares under the Open
Offer  (whether in whole or in part) in respect of 1,062,537
New  Ordinary  Shares  and their entitlements  to  such  New
Ordinary  Shares  are being placed firm  with  institutional
investors  as  part  of  the Placing. In  addition,  certain
directors of the Company have irrevocably undertaken to take
up  their entitlements to 243,750 New Ordinary Shares  under
the  Open Offer. The Placing has been fully underwritten  by
WestLB Panmure Limited ("WestLB Panmure").

The  proceeds  from  the Placing and Open  Offer,  which  is
conditional, inter alia, upon completion of the Acquisition,
will  be  partly used to fund the consideration  payable  on
completion of the Acquisition. The directors of the  Company
(the "Directors") are currently involved in discussions with
regard to a number of other potential acquisitions which may
or  may  not  reach completion. The Directors consider  that
having  the balance of the proceeds of the Placing and  Open
Offer in addition to existing cash resources, bank and other
facilities,  will  put the Company in a strong  position  to
take  advantage  of  these  acquisition  opportunities.  The
balance  of the proceeds of the Placing and Open Offer  will
be  placed  on deposit pending further acquisitions  or  use
within the business.

Goldshield also announced its preliminary audited  financial
results for the year ended 31 March 1999 today.


Information on the Acquisition

Goldshield  has  agreed, subject to, inter alia,  Admission,
the  Placing  and  Open Offer and shareholder  approval,  to
purchase  the  licences, technical know-how,  marketing  and
distribution   rights,  goodwill  and   trademarks   of   10
pharmaceutical  products, from SB for a total  consideration
of  #17.0  million. The consideration will be paid in  three
instalments,  with  the  first instalment  of  #6.0  million
payable on completion of the acquisition of the first  eight
products.   The  balance  will  be  split  into  two   equal
instalments  payable  on the first and second  anniversaries
thereof.

The  Acquisition will give Goldshield product  licences  and
marketing   and   distribution  rights  in   43   countries,
including: Australia, Finland, Israel, the Netherlands,  New
Zealand, Pakistan, the Republic of Ireland, the Republic  of
South  Africa, Saudi Arabia, Spain and Sweden.  The  Company
already owns the UK rights to distribute and market three of
the  products for which it is acquiring international rights
and  will  be  acquiring  the UK  rights  to  three  further
products.

The  following table sets out an analysis of  sales  of  the
products  being acquired (excluding Fenbid and  Parnate)  by
location  of  customer and location of company manufacturing
the product.

Analysis of Sales 
(excluding Fenbid and Parnate)          #000          #000
for the year ended 31 December 1998    By Customer  By Company*

UK                                     1,187          3,052
Continental                            2,328          2,211
Rest   of   the   World                3,876          2,128
                                       7,391          7,391

    *Indicates  the country in which products are  currently
    manufactured and from which domestic and export  markets
    are sourced.

SB   has   undertaken   to  support  the   manufacture   and
distribution  of the products for a period of   between  two
and   five   years  depending  on  the  territory  following
completion  of  the  acquisition of  the  relevant  product.
During  this  period  SB  will facilitate  the  transfer  of
technical  and  manufacturing know-how  to  Goldshield  and,
under the direction of Goldshield, ensure the assignment  of
trademarks  and  licences to Goldshield or  to  Goldshields
nominated assignee.

The  Directors believe that these products will enhance  and
complement  the  Companys existing product  portfolio.  The
products  fall  into  four broad therapeutic  areas,  namely
cardiovascular  disease,  gastro-intestinal  disease   (GI),
central nervous system disease (CNS), and pain and arthritic
disorders.

Total  Sales  of  8  Products for the  Year  Ended  31
December 1998

    Therapeutic Area    Product             Sales
                                             #000

    Cardiovascular      Dyazide             2,096
    Cardiovascular      Dibenyline            844
    Cardiovascular      Dyta-Urese            411
    CNS                 Stelazine           1,344
    CNS                 Stelabid              302
    GI                  Dyspamet            1,022
    Pain/Arthritis      Ecotrin               156
    Pain/Arthritis      Ridaura             1,216
    Total                                   7,391

*  Sales  figures  are for the markets in respect  of  which
product licences and marketing rights are due to be acquired
under  the  Acquisition  Agreement and  are  based  on  SBs
average exchange rate for the period in respect of sales  in
currencies other than pounds sterling.

In  addition  to the eight products detailed  in  the  above
table, the Acquisition Agreement provides for the Company to
obtain   SBs  rights  to  Fenbid  and  Parnate  in  certain
territories.  The  Agreement  makes  provision  for  a  cash
adjustment  should the combined sales of Fenbid and  Parnate
in such territories for the year ended 31 December 1998 have
fallen  short  of  or exceeded #400,000. Completion  of  the
acquisition  of  Fenbid and Parnate will  take  place  three
months after the acquisition of the eight other products.

Dyazide  is a diuretic that has a well established place  in
the  treatment of hypertension and fluid retention.  Product
licences and marketing rights are being acquired principally
for  the  UK,  the  Republic  of Ireland,  the  Netherlands,
Australia and the Republic of South Africa, together with  a
further  19 territories. The Directors believe this  product
will    complement    Goldshields   existing    range    of
cardiovascular products.

Dyta-Urese  has similar indications to Dyazide, but  uses  a
different  active  drug  substance.  Product  licences   and
marketing  rights  are principally being  acquired  for  the
Netherlands.

Dibenyline  is  used in the treatment of acute  hypertensive
episodes.  Goldshield  currently  owns  the  UK  rights  for
Dibenyline  and  the Directors believe that the  Acquisition
will  enable  the  Company  to market  this  product  to  an
extended  customer  base.  Product  licences  and  marketing
rights  are principally being acquired for Israel,  together
with a further 17 territories.

Stelazine   and  Stelabid  are  based  on  the  tranquiliser
trifluoperazine which is used in the treatment of a  variety
of  anxiety and psychotic states and also as an anti-emetic.
The  Company currently markets and distributes Stelazine  in
the  UK  and  is  acquiring product licences  and  marketing
rights  to  Stelazine in Spain, Saudi Arabia, Australia  and
the  Republic  of South Africa, together with a  further  20
territories.  In the case of Stelabid, product licences  and
marketing  rights  are being acquired  for  Pakistan  and  a
further two territories.

Dyspamet  is used in the treatment and prevention of  peptic
ulcers  and  conditions  where  reduction  of  gastric  acid
secretion  is likely to be beneficial. Product licences  and
marketing  rights  are  being acquired  for  the  UK,  Saudi
Arabia,  United Arab Emirates and Pakistan together  with  a
further 9 territories.

Ridaura  is  a  gold salt that is used in the  treatment  of
active,  progressive rheumatoid arthritis. Product  licences
and   marketing  rights  are  being  acquired  for  Austria,
Finland,  Sweden and Australia, together with a  further  16
territories.

Ecotrin  is  a  brand  of  Aspirin.  Product  licences   and
marketing  rights  are being acquired for  the  Republic  of
South Africa and a further three territories.

Fenbid is used in the treatment of pain and arthritis, which
is  also currently marketed and distributed by Goldshield in
the  UK.  The  acquisition of the trademarks for  additional
territories  offers the potential for line  extensions  with
the Companys Fenbid Gel in certain territories.

Parnate  is  an  anti-depressant used  in  treating  certain
specific  types  of  depression  and  will  complement   the
Companys existing CNS range.

Reasons for the Acquisition

The Acquisition will expand the Companys product portfolio.
The  Directors  believe  that although  product  sales  have
declined  over  the  past two years the Companys  marketing
skills will improve returns from the acquired products.  The
Directors  believe  that the value to the Company  justifies
the  price  paid  by it. Additionally, these purchases  will
open up well established overseas marketing and distribution
channels to the Groups existing pharmaceutical products.

In  particular,  the Directors believe that the  Acquisition
will provide the Group with:

* an increased income and profit inflow both domestically
  and internationally;
* an established presence in international markets;
* a   platform  for  the  international  expansion   of
  Goldshields existing products; and
* additional opportunities to develop the infrastructure
  necessary  to expand Goldshields business in international
  markets.

Finally,  the  Directors believe that the  Acquisition  will
complement  and  add  value to the  existing  pharmaceutical
portfolio through synergies in marketing and sales and  more
efficient use of resources.

Management of the Acquisition

The  integration  of  the Acquisition  will  be  managed  in
phases.  The Companys management has considerable knowledge
and  experience of several of the international markets  for
which  products are being acquired and this will be  further
strengthened by new appointments as appropriate.

SB  has agreed to continue to manage the distribution of the
products  for  periods  of  2-5  years  depending   on   the
complexity of the market concerned.

Sales  and marketing of these products in the UK and exports
from  the UK will be integrated first. This will be followed
by integration of the European markets and finally, within 5
years,  the  more  complex  territories  of  Australia,  the
Republic  of  South Africa, New Zealand and Pakistan,  which
will require a local presence.

The  Directors believe that the structure of the Acquisition
is  sufficiently flexible and will allow management time for
the effective integration of the acquired portfolio.

Funding the Acquisition

The  initial  consideration  for  the  Acquisition  of  #6.0
million is payable upon Completion and will be satisfied  by
part  of  the proceeds of the Placing and Open Offer,  which
will  raise  #15.6 million (net of expenses). The  Directors
currently  anticipate that the balance of the  consideration
will be funded through the Groups cash resources, bank  and
other  facilities in existence at the time  the  instalments
become payable.

The balance of the consideration of #11.0 million is secured
by  a guarantee from NatWest, which has agreed to grant  the
Company  further  loan facilities. Under the  terms  of  the
facility provided by NatWest, Goldshield will be required to
execute  a counter-indemnity in favour of NatWest in respect
of any claims made against NatWest under the guarantee.

Principal terms of the Placing and Open Offer

Under  the  Placing  and Open Offer 4,022,502  New  Ordinary
Shares  are  to be issued at 410p per share to  raise  #15.6
million.  This price represents a discount of 3.8 per  cent.
to  a  price  of  426p per share, being  the  middle  market
closing  price of the Ordinary Shares, as derived  from  the
Daily  Official  List,  on  6  July  1999  being  the   last
practicable date before publication of this document. WestLB
Panmure  has fully underwritten the Placing and Open  Offer.
Application  has now been made to the London Stock  Exchange
for  the  admission of the 4,022,502 New Ordinary Shares  to
the  Official List. It is expected that dealings in the  New
Ordinary Shares will commence on 5 August 1999.

In  order  to give existing shareholders the opportunity  to
participate  in  the  issue  of  the  New  Ordinary  Shares,
Goldshield has arranged for WestLB Panmure as its  agent  to
invite  applications from Qualifying Shareholders to acquire
New  Ordinary  Shares at the Placing Price  under  the  Open
Offer.  Qualifying Shareholders may apply for  as  many  New
Ordinary  Shares as they wish up to their maximum  pro  rata
entitlement on the basis of:

  1 New Ordinary Share for every 8 existing Ordinary Shares

held  at  the  Record  Date being 30 June  1999  and  so  in
proportion  for any greater number of Ordinary  Shares  then
held.  Applications will be disregarded to the  extent  that
they exceed the applicants respective pro rata entitlements
and any Qualifying Shareholder so applying will be deemed to
have  applied  only for their maximum entitlement.  The  New
Ordinary  Shares  will  rank pari passu  with  the  existing
issued Ordinary Shares, save that they will not rank for the
final  dividend of 0.92p per share in respect  of  the  year
ended  31 March 1999, which is expected to be payable  on  6
August 1999 to Shareholders on the register at the close  of
business on 23 July 1999.

Individual entitlements will be rounded down to the  nearest
whole  number  of  New  Ordinary Shares.  Fractions  of  New
Ordinary   Shares  that  would  otherwise  arise   will   be
aggregated and placed with institutional investors  for  the
benefit of the Company.

Certain  Directors  (whether  in  whole  or  in  part)  have
irrevocably  agreed  not  to  make  application  for   their
entitlement to New Ordinary Shares under the Open  Offer  in
respect of an aggregate of 1,062,537 New Ordinary Shares and
their  entitlements to such New Ordinary  Shares  are  being
placed  firm by WestLB Panmure with institutional  investors
as  part  of  the  Placing.  In  addition,  certain  of  the
Directors  have  irrevocably undertaken  to  take  up  their
entitlements to New Ordinary Shares under the Open Offer.

Use of Proceeds of the Placing and Open Offer

The  Directors propose to raise approximately #15.6 million,
net  of  expenses, by way of the Placing and Open  Offer  of
which  #6.0  million  will be used to  satisfy  the  initial
consideration under the Acquisition.

The  Directors  are currently involved in  discussions  with
regard to a number of other potential acquisitions which may
or  may  not  reach completion. The Directors consider  that
having  the balance of the proceeds of the Placing and  Open
Offer in addition to existing cash resources, bank and other
facilities,  will  put the Company in a strong  position  to
take advantage of these acquisition opportunities.

Extraordinary General Meeting & action to be taken

The  Acquisition is subject to the approval of  Shareholders
at   the   EGM.   Accordingly  a  circular  to  shareholders
describing  the Acquisition and the Placing and  Open  Offer
and including a notice convening an EGM of the Company to be
held at 10.15 a.m. on 30 July 1999 or, if later, immediately
after  the conclusion of the Annual General Meeting  of  the
Company  to  be  held earlier that day at 22  Tudor  Street,
London EC4Y OJJ is being sent to shareholders today.  Applications
in respect of the Open Offer must be received by 3p.m. 28 July 1999.

Application forms are personal to shareholders and may not be transferred
except to satisfy bona fida market claims.

This  announcement  is  based upon  a  prospectus  which  is
expected  to  be  posted to shareholders later  today.  This
announcement  doesnt  necessarily  contain  all   pertinent
information  relevant to an investment decision.  All  items
referred to in this announcement have been used in the  same
context as those set out in the "definition sections" of the
prospectus.  For  further  information  please  contact  the
Company  or WestLB Panmure, New Broad Street House,  35  New
Broad Street, London, EC2M 1SQ.

END


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