Categories Earnings, Other Industries

Glaxo buys Novartis’ share of consumer healthcare joint venture

U.K.-based pharma giant GlaxoSmithKline (GSK), which holds about a two-thirds share in the Consumer Healthcare business JV with its partner Novartis (NVS), plans to acquire the rest of the 36.5% stake held by the Swiss-based pharma giant for $13 billion. As a result of this deal, Novartis’ four directors will leave the JV Board, which has 11 members in total.

The JV business, which handles Aquafresh toothpaste and Tums digestion tablets among other products, was formed in 2015, in which, Novartis is entitled to ask Glaxo to purchase its stake at any time effective from 2018 to 2035. Now, Glaxo does not have to be financially prepared for such an event.

GSK, which retreated from the bidding war for the Pfizer consumer healthcare business, will now be able to concentrate on its preferences such as pharma research, which will require capital allocation. The deal will also benefit GSK’s cash flows and non-GAAP profit.

As a result of this deal, Novartis’ four directors will leave the JV Board, which has 11 members in total

In order to finance this deal, GSK is looking at options to sell its Horlicks brand along with its other nutrition products and will soon start a strategic review of this business. This review process might not expect to result in a transaction. Horlicks enjoys strong sales in India and the sale of Glaxo’s stake in its Indian unit could provide some benefits.

This transaction, which needs the approval of GSK shareholders, will also give Novartis opportunities to allocate capital to more priority businesses and also flexibility to focus on other acquisition options. While GSK stock rose 2.5%, Novartis fell slightly when the market closed today.

Whether this deal has stopped Glaxo from taking over the Pfizer consumer healthcare business, which would come at a hefty price of up to $20 billion, or whether it has actually given it the financial flexibility to pursue the same remains to be seen. However, at present, with Novartis, Glaxo appears to have made the right move.

Most Popular

PepsiCo (PEP) expects snacks business to remain resilient in the near term

PepsiCo Inc. (NASDAQ: PEP) reported first quarter 2021 earnings results on Thursday that topped expectations on both the top and bottom lines. The stock has gained 7% in the past

For Wells Fargo (WFC), Q1 sets the stage for long-term recovery

Emerging from the slowdown caused by coronavirus, the financial services sector entered fiscal 2021 on a bright note, thanks to improving economic activity and the COVID-driven boom in stock trading.

Top 3 Artificial Intelligence stocks you may consider in 2021

Artificial Intelligence has become an integral part of the US economy. According to the analyst’s insights, AI market revenue in 2020 was $25.9 billion. The AI market in the North


Add Comment
Viewing Highlight