GlaxoSmithKline up on joint venture news
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The price of shares in GlaxoSmithKline (LON:GSK) has risen by 7.62% to 1,558.58p (as of 12:15) after the company announced that it would form a consumer healthcare joint venture with Pfizer. The combined entity will have £9.8 billion of annual sales and GSK will hold a 68% equity interest.
The deal would support moves to separate GSK into distinct consumer healthcare and pharmaceutical/vaccines businesses which management believe would increase shareholder value.
Chief Executive Emma Walmsley commented: “Eighteen 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. We have improved our operating performance and have set out a new approach to R&D. We have also started to reshape the Group’s portfolio through prioritisation of R&D programmes, acquisitions such as that proposed with the oncology biopharmaceutical company, TESARO, the minority buy-out of the consumer healthcare business and a series of non-core product divestments.
“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. At the same time, incremental cashflows and visibility of the intended separation will help support GSK’s future capital planning and further investment in our pharmaceuticals pipeline.
“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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