GlaxoSmithKline, Pfizer to Create Consumer Healthcare JV
December 19 2018 - 1:58AM
Dow Jones News
By Carlo Martuscelli
GlaxoSmithKline PLC (GSK.LN) said Wednesday that it will create
a consumer-health-focused joint venture with U.S. drugmaker Pfizer
Inc. (PFE), with an eye on an eventual spinoff.
The two companies will combine their consumer-health units to
create a single business with combined sales of around 9.8 billion
pounds ($12.4 billion), with Glaxo holding a majority 68% stake and
Pfizer the remaining 32%. The U.K. pharmaceutical major said it
expects to close the deal in the second half of 2019, and it
intends to separate the joint venture within three years of it
closing through a separate listing on the U.K. market.
The combination is expected to be accretive to adjusted earnings
and free cashflow in the first full year after it closes, and be
accretive to earnings in the second year, Glaxo said.
The company said the joint venture is expected to generate
annual cost savings of GBP500 million by 2022, for cash costs of
GBP900 million and noncash charges of GBP300 million, adding this
will be covered with GBP1 billion of divestments.
The U.K. company said the move allows it to build on its buy-out
of Novartis's stake in a previous health-care joint venture, a $13
billion deal announced earlier in the year. The creation of a joint
venture will help increase cashflow, allowing it to strengthen its
pharmaceuticals division through increased research investment,
Glaxo said.
The company backed its dividend policy and said it continues to
expect to pay out 80 pence per share in 2018 as well as in
2019.
"With our future intention to separate, the transaction also
presents a clear pathway forward for GSK to create a new global
pharmaceuticals/vaccines company, with an R&D approach focused
on science related to the immune system, use of genetics and
advanced technologies, and a new world-leading consumer healthcare
company," Chief Executive Emma Walmsley said.
Write to Carlo Martuscelli at carlo.martuscelli@dowjones.com
(END) Dow Jones Newswires
December 19, 2018 02:43 ET (07:43 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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