GSK agrees 9 billion pounds deal with Novartis to acquire full ownership of consumer healthcare unit | Progresiv
Just days after pulling out of the race for Pfizer’s consumer business, GlaxoSmithKline has announced that it has reached an agreement with Novartis to buyout its 36.5% stake in their consumer healthcare joint venture for 13 billion dollars (9.2 billion pounds). 
The JV was formed as part of the three-part transaction between GSK and Novartis in 2014. The consumer healthcare unit, which owns brands such as Panadol, Nicotinell, and Sensodyne, generated sales of 7.8 billion pounds last year. Since 2015, sales have grown 4% on a 3-year CAGR basis with an overall improvement in operating margins from 11.3% to 17.7%.
GSK said the deal will enable shareholders to “capture the full value” of its consumer healthcare growth, with the business “well positioned” to deliver further sales and operating margin improvements (‘mid-20’s’ percentages by 2022).
GSK added that is was initiating a strategic review of Horlicks and its other consumer healthcare nutrition products to support funding of the deal, and to drive its increased focus on OTC and Oral Health categories. Combined sales of these products was around 550 million pounds in 2017, the majority of which is generated in India.
The group expects the outcome of this strategic review to be concluded around the end of 2018 but stressed there was no assurance that the review process will result in any transaction.
GSK’s Chief Executive, Emma Walmsley, commented: “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.”
The buyout will need the approval of GSK’s shareholders and is expected to complete during the summer. (www.kamcity.com)
