Unic Press UK: GlaxoSmithKline plc (GSK) announced yesterday that it reached an agreement with Novartis for the buyout of Novartis’ 36.5% stake in their Consumer Healthcare Joint Venture for $13 billion (£9.17 billion).
On its website, GSK said:
- “Agreement with Novartis to buyout Novartis’ 36.5% stake in the Consumer Healthcare Joint Venture for $13 billion (£9.2 billion);
- “Proposed transaction addresses one of the Group’s stated key capital allocation priorities, supporting efforts to improve performance and capital planning for the Group;
- “100% ownership of world-leading Consumer Healthcare business enables GSK shareholders to capture full value of future performance;
- “Consumer Healthcare business well positioned to deliver sales and earnings growth, driven by category-leading Power Brands, science-based innovation and improved efficiencies. Operating margins to approach ‘mid-20’s’ percentages by 2022 (at 2017 CER);
- “Transaction expected to be accretive to adjusted earnings in 2018 and thereafter, and to strengthen cash flow generation;
- “GSK also to initiate strategic review of Horlicks and other consumer nutrition products to support transaction funding. Review will include an assessment of Group’s shareholding in Indian subsidiary, GlaxoSmithKline Consumer Healthcare Ltd.“
Given the terms and conditions of the original transaction which was inked in 2014, Novartis has the rights to require GSK to purchase all of its stake (or acquire a specified tranches of it) in the Consumer Healthcare Joint Venture.
In 2017, GlaxoSmithKline plc reported sales of $11 billion (£7.8 billion) on its Consumer Healthcare business.
