Shareholders in GSK are set for a £4 billion payout after the pharma giant reached closure on a multi-billion-dollar mega-deal with Swiss rival Novartis.
The chief executives of both firms yesterday hailed completion of the multi-faceted transaction, which has been many months in the planning and will result in a significant refocusing of their individual operations.
Under the terms of the deal GSK has sold its cancer business to Novartis for $16bn, and control of the Swiss-firm’s vaccines operation has gone in the opposite direction for an initial £5.25bn fee.
The two companies have also set out on a major new joint venture in the consumer healthcare sector, although GSK will hold a controlling 63.5% interest in that business.
The deal was finalised yesterday with a payment of $16bn by Novartis to GSK for its oncology portfolio and related assets.
The net after-tax proceeds of the transaction received by GSK are estimated to be $7.8bn, a sum that will be used to fund a capital return to shareholders of £4bn.
Assuming approvals are given to the scheme, GSK said the payout would be made in the form of a B share scheme.
GSK yesterday said it now expected to jointly report its first-quarter results for 2015 and hold an investor meeting in May, when it will provide earnings guidance for the full year and profile the medium and long-term shape and opportunities for the enlarged group.
“Completion of this transaction represents a major step forward in the group’s strategy to create a stronger and more balanced set of businesses across Pharmaceuticals, Consumer Healthcare and Vaccines,” GSK chief executive officer Sir Andrew Witty said.
“We will now be focused on rapidly implementing our integration plans to realise the growth and synergy opportunities we see in the new Consumer Healthcare and Vaccines businesses.
“We look forward to sharing more details of this with our shareholders on May 6.”
The deal has had local implications as Novartis also moved to sell off its animal health division to Eli Lilly for $5.4bn at the same time as it progressed negotiations with GSK.
That secondary transaction saw the US-based Prozac manufacturer take control of Novartis’s factory at Dunsinane Industrial Estate in Dundee on January 1.
Basel-based Novartis yesterday said the acquisition of GSK’s oncology operation and two pipeline compounds would immediately lift core margins and sharpen the firm’s focus on growing segments of innovative pharmaceuticals, eye care and generics.
“The completion of the GSK transactions focuses Novartis, and further establishes our leading positions in key growing business segments,” Novartis CEO Joseph Jimenez said yesterday.
“We expect this evolution of our strategy to improve margin performance and position us well to meet future changes in the healthcare industry.”
Article from The Courier
