Wednesday, 25 February 2015

GlaxoSmithKline (GSK) announces that 3-part Novartis transaction set to complete in early March 2015

The pharmaceutical giant, GlaxoSmithKline, has announced that its three-part transaction with Swiss rival Novartis is set to be completed on 2 March 2015. They stated today:

GlaxoSmithKline plc (LSE/NYSE: GSK) today announces that, following good progress on obtaining clearances and approvals to enable completion of its three-part transaction with Novartis, it expects to complete the transaction in the week commencing 2 March 2015. 
Originally announced on 22 April 2014, the transaction includes GSK’s acquisition of Novartis’s vaccines business (excluding influenza vaccines), the creation of a consumer healthcare joint venture between GSK and Novartis and the divestment to Novartis of GSK’s marketed Oncology portfolio, related R&D activities and rights to two pipeline AKT inhibitors.
As GSK explained when the proposed transaction was announced in April last year, the three parts are:
  • GSK and Novartis will create a new world-leading Consumer Healthcare business with 2013 pro forma revenues of £6.5 billion. GSK will have majority control with an equity interest of 63.5% 
  • GSK will acquire Novartis’ global Vaccines business (excluding influenza vaccines) for an initial cash consideration of $5.25 billion with subsequent potential milestone payments of up to $1.8 billion and ongoing royalties 
  • GSK will divest its marketed Oncology portfolio, related R&D activities and rights to its AKT inhibitor and also grant of commercialisation partner rights for future oncology products to Novartis for an aggregate cash consideration of $16 billion (of which up to $1.5 billion depends on the results of the COMBI-d trial)
As a result of this, GSK intends to return £4 billion to shareholders (via a B shares scheme). With the 4.86 billion share outstanding from the company this would be a capital return of about 82p per GSK share.

GSK is by far my largest holding. As a result, with my 191 shares I should expect to receive about £156 from this windfall. But what is more exciting is the nature of the three-part deal itself. Hopefully this will be helpful in streamlining operations and deriving stronger growth going forward.

You can read the original press release today here.

[Creative Commons image reproduced from Flickr user Ian Wilson (foolstopzanet)]

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