GlaxoSmithKline (GSK) has signed an agreement to acquire the 36.5% stake held by Novartis in their Consumer Healthcare joint venture (JV) for $13bn.
Launched in 2015, the JV included a three-part inter-conditional transaction between the companies. Under the deal, Novartis has the right to require GSK to buy its stake.
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The divestiture is expected to help Novartis to develop and advance its core businesses, and will provide GSK with 100% ownership to the JV.
Novartis CEO Vas Narasimhan said: “While our consumer healthcare JV with GSK is progressing well, the time is right for Novartis to divest a non-core asset at an attractive price.
“This will strengthen our ability to allocate capital to grow our core businesses, drive shareholder returns, and execute value creating bolt-on acquisitions as we continue to build the leading medicines company, powered by digital and data.”
GSK intends to improve its science-based innovation and operational efficiencies to deliver sales growth, improve margins and generate attractive returns.
The company plans to launch a strategic review of its consumer healthcare nutrition products to fund this transaction.
GSK CEO Emma Walmsley said: “The proposed transaction addresses one of our key capital allocation priorities and will allow GSK shareholders to capture the full value of one of the world’s leading Consumer Healthcare businesses.
“For the group, the transaction is expected to benefit adjusted earnings and cash flows, helping us accelerate efforts to improve performance.”
GSK Consumer Healthcare reported sales of £7.8bn last year, with a 4% growth since 2015 on a three-year compound annual growth rate basis.
The acquisition is subject to approval by GSK shareholders.
