GlaxoSmithKline (GSK) has reached an agreement with Pfizer to combine the consumer health businesses into a new “world leading” joint venture, with combined sales of approximately £9.8bn.
GSK will have a majority controlling equity interest of 68% and Pfizer will have an equity interest of 32% in the joint venture.
According to the groups the proposed all-equity transaction represents a “compelling opportunity” to build on the recent buyout of Novartis’ stake in GSK Consumer Healthcare, and to create a new “world-leading” consumer healthcare business and to deliver further significant shareholder value.
GSK said the proposed transaction also supports the strengthening its pharmaceuticals business over the next few years by increasing cash flows, providing an effective pathway through the separation of GSK Consumer Healthcare to build further support for investment in its R&D pipeline.
Emma Walmsley, CEO of GSK, said: “18 months ago, I set out clear priorities and a capital allocation framework for GSK to improve our long term competitive performance and to strengthen our ability to bring new breakthrough medicines and better healthcare products to people around the world.
“The transaction we have announced today is a unique opportunity to accelerate this work. Through the combination of GSK and Pfizer’s consumer healthcare businesses we will create substantial further value for shareholders.”
She added: “Ultimately, our goal is to create two exceptional, UK-based global companies, with appropriate capital structures, that are each well positioned to deliver improving returns to shareholders and significant benefits to patients and consumers.”