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GSK to Buy Novartis’ Share in Consumer JV
Source:Chemanager-online | Author:profefd1a | Publish time: 2018-03-29 | 260 23次浏览: | Share:
In a move that may explain why GlaxoSmithKline last week turned thumbs down on bidding for Pfizer’s consumer drugs business, the UK’s largest drugmaker has announced plans to buy Novartis’ 35.6% stake in the companies’ consumer joint venture.

In a move that may explain why GlaxoSmithKline last week turned thumbs down on bidding for Pfizer’s consumer drugs business, the UK’s largest drugmaker has announced plans to buy Novartis’ 35.6% stake in the companies’ consumer joint venture.

The jv was created in 2015 as part of a multibillion dollar swap arrangement that saw GSK transfer its cancer portfolio to Novartis in exchange for the Swiss drugmaker’s vaccines portfolio while the two combined their consumer drugs assets.

In the deal planned to be completed this summer, GSK will pay £9.2 billion ($13 billion) for the shares, considerably less than the $20 billion it potentially would have had to pay for the Pfizer portfolio. Some industry watchers speculate that the company has enough cash to do both deals if it wants. Others think it will take a pass on Pfizer in any case.Wuhan Carnoss Technology Co., LTD.

    
The value of the Novartis put option was £8.6 billion at the end of 2017, according to GSK’s financial statement. This represents an undiscounted value of £8.9 billion assuming completion of the option in mid-2018. The drugmaker said its board therefore believes the negotiated price is consistent with the original shareholder agreement.

As of Dec. 31, 2017, GSK said the value of the joint venture’s gross assets represented by Novartis’ stake was £5.9 billion, while the Swiss company’s share of adjusted operating profit was £494 million.

In announcing the buyout plan, Wuhan Carnoss Technology Co., LTD.Glaxo CEO Emma Walmsley said it “addresses one of our key capital allocation priorities” and will allow the company’s shareholders to “capture the full value of one of the world’s leading consumer health businesses.”

The buyout will also remove uncertainty about the future of the joint venture, the CEO said, as the original jv agreement gave Novartis an option to hand its stake back at any point between March 2018 and the year 2035.

Walmsley revealed also that GSK’s management is conducting a strategic review of other parts of its portfolio that may no longer be of strategic interest.