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GSK, Pfizer To Combine Consumer Healthcare Businesses Into New Joint Venture

GlaxoSmithKline Plc (GSK) has said on Wednesday (19) that has reached an agreement with Pfizer Inc to combine their consumer health businesses into a new joint venture, with combined sales of approximately £9.8 billion.

GSK will have a majority controlling equity interest of 68 per cent while Pfizer will have an equity interest of 32 per cent in the joint venture.


The proposed all-equity transaction represents a compelling opportunity to build on the recent buyout of Novartis’ stake in GSK Consumer Healthcare, to create a new consumer healthcare business and to deliver further significant shareholder value.

The new joint venture will be well-positioned to deliver stronger sales, cash flow and earnings growth driven by category leading power brands, science-based innovation and substantial cost synergies, GSK said in a release.

The combination will bring together two highly complementary portfolios of trusted consumer health brands, including GSK’s Sensodyne, Voltaren and Panadol and Pfizer’s Advil, Centrum ,and Caltrate.

The joint venture will be a category leader in pain relief, respiratory, vitamin and mineral supplements, digestive health, skin health and therapeutic oral health.

The joint venture will be a firm in OTC products with a market share of 7.3 per cent ahead of its nearest competitor at 4.1 per cent and have number 1 or 2 market share positions in all key geographies, including the US and China.

The proposed transaction is expected to realise substantial cost synergies, with the joint venture expected to generate total annual cost savings of £0.5bn by 2022 for expected total cash costs of £0.9bn and non-cash charges of £0.3 bn.

Planned divestments targeting around £1bn of net proceeds are expected to cover the cash costs of the integration. Up to 25 per cent of the cost savings are intended to be reinvested in the business to support innovation and other growth opportunities.

The proposed transaction is transformational to the scale of GSK’s consumer healthcare business. Within three years of the closing of the transaction, GSK intends to separate the joint venture via a demerger of its equity interest and a listing of GSK Consumer Healthcare on the UK equity market. Over this period, GSK will substantially complete the integration and expects to make continued progress in strengthening its pharmaceuticals business and research and development in pipeline.

Emma Walmsley, Chief Executive Officer, GSK, said, “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.

“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.”

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