Drug makers GSK, Pfizer will merge health care divisions

20 December, 2018, 11:39 | Author: Lillian Steele
  • Panadol and Chapstick firms in mega-merger

Share price of Pfizer gained almost 3 percent intraday Thursday after company entered in to joint venture with GlaxoSmithKline.

GlaxoSmithKline of the United Kingdom and Pfizer plan to combine their consumer health businesses with sales of $12.7 billion, into a company majority owned by the British company.

GlaxoSmithKline will hold a 68 percent stake in the new consumer health venture and Pfizer will hold the remaining 32 percent, reported WSJ.

The merger is set to deliver cost savings.

GSK said it planned to create two separate UK-based companies - one focused on pharmaceuticals and vaccines and the other on consumer healthcare - within three years of completing the tie-up.

GSK will have a controlling equity interest of 68pc, while Pfizer will have an equity interest of 32pc in the joint venture.

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To achieve this, GSK intends to separate the JV as an independent company - within three years of closing the transaction - via a demerger of its equity interest to its shareholders and listing the firm on the United Kingdom equity market.

"I'm confident we'll be in a more settled environment than we are in today", CEO Emma Walmsley said.

Walmsley added: "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 [research and development] approach focused on science related to the immune system, use of genetics and advanced technologies, and a new world-leading consumer healthcare company". But the move surprised analysts because Walmsley, who took over in April, had seemed at first to be following in the footsteps of her predecessor, Andrew Witty, in resisting such a change. GSK plans divestments of some 1 billion pounds.

"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".

The proposed new business will be the biggest in the world in the "over-the-counter" healthcare market, with annual revenue of £9.8 billion.

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