GSK completes major three-part transaction with Novartis

Published: 2-Mar-2015

£4bn to be returned to shareholders


GlaxoSmithKline and Novartis have completed a series of asset swaps worth more than £20bn that will reshape both pharmaceutical companies.

GSK has acquired Novartis's global Vaccines business (excluding influenza vaccines) for an initial cash consideration of US$5.25bn; has created a Consumer Healthcare joint venture with Novartis in which GSK will have majority control and an equity interest of 63.5%; and has sold its Oncology business to Novartis for an aggregate cash consideration of $16bn.

Under the terms of the transaction, up to $1.5bn of that purchase price may have to be returned to Novartis if certain conditions relating to the COMBI-d trial are not met. Following the positive results from this study announced on 6 February, GSK believes these conditions will be satisfied.

As a result, following completion, GSK plans to return £4bn to shareholders.

The two companies announced the deals in April 2014.

Completion of this transaction represents a major step forward in the Group's strategy to create a stronger and more balanced set of businesses

Sir Andrew Witty, CEO, GSK said: 'Completion of this transaction represents a major step forward in the Group's strategy to create a stronger and more balanced set of businesses across Pharmaceuticals, Consumer Healthcare and Vaccines. We will now be focused on rapidly implementing our integration plans to realise the growth and synergy opportunities we see in the new Consumer Healthcare and Vaccines businesses. We look forward to sharing more details of this with our shareholders on 6 May.'

Joseph Jimenez, CEO of Novartis, added: 'The completion of the GSK transactions focuses Novartis, and further establishes our leading positions in key growing business segments.

'We expect this evolution of our strategy to improve margin performance and position us well to meet future changes in the healthcare industry.'

Since the end of 2013, the Swiss pharmaceutical company has engaged in a series of transactions to sharpen the company's focus on three core business segments with global scale: innovative pharmaceuticals, eye care and generics.

As a result of today's announcement, Novartis Oncology now has a portfolio of 22 oncology and haematology medicines to treat more than 25 conditions worldwide, with GSK providing new therapies in melanoma, renal cell carcinoma and haematology.

Novartis also has opt-in rights for GSK's current and future oncology R&D pipeline (excluding oncology vaccines), which could be a source of new compounds and new targets. Sales of the acquired GSK oncology products in 2014 were approximately $2bn and grew approximately 32% in local currency compared with 2013.

GSK Consumer Healthcare is expected to have leading positions in four key OTC categories - Wellness, Oral Health, Nutrition and Skin Health.

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