Published On: Wed, Mar 28th, 2018

GSK to buy out Novartis’ stake in consumer healthcare JV for $13bn

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Pharma acquisition news : GlaxoSmithKline (GSK) has agreed to buy out Swiss pharma company Novartis’ stake of 36.5% in their consumer healthcare joint venture (JV) for a price of $13 billion, just days after pulling out from a $20 billion race to acquire Pfizer’s consumer healthcare business.

Through a 100% ownership in the consumer healthcare business, GSK, a British pharma company believes that it will enable its shareholders to enjoy full value of future performance.

Reuters reported that the consumer healthcare business in question comprises of products such as muscle gel Voltaren, Sensodyne toothpaste, Nicotinell patches and Panadol headache tablets among others.

Emma Walmsley – CEO of GSK said: “The proposed transaction addresses one of our key capital allocation priorities and will allow GSK shareholders to capture the full value of one of the world’s leading Consumer Healthcare businesses.

“For the Group, the transaction is expected to benefit adjusted earnings and cash flows, helping us accelerate efforts to improve performance. Most importantly it also removes uncertainty and allows us to plan use of our capital for other priorities, especially pharmaceuticals R&D.”

GSK's corporate headquarters in Brentford, London

GSK’s corporate headquarters in Brentford, London. Photo courtesy of GlaxoSmithKline plc.

GSK said that to support funding for the transaction, it is launching a strategic review of Horlicks and its other consumer healthcare nutrition products and also to increase its focus on Over-the-Counter (OTC) and Oral Health categories.

For Novartis, its exit from the consumer healthcare joint venture will enable it to focus further on developing and expanding its core businesses.

Vas Narasimhan – CEO of Novartis, said: “While our consumer healthcare joint venture with GSK is progressing well, the time is right for Novartis to divest a non-core asset at an attractive price.

“This will strengthen our ability to allocate capital to grow our core businesses, drive shareholder returns, and execute value creating bolt-on acquisitions as we continue to build the leading medicines company, powered by digital and data.”

The Novartis GSK joint venture was created in 2015 as part of the portfolio transformation of the Swiss pharma company. It was formed through a three-part inter-conditional transaction, which included the merger of the Novartis OTC business and the GSK consumer healthcare business into the existing joint venture.

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