GSK and Pfizer sign joint venture, but will demerge after three years
Pharmaceutical companies GSK and Pfizer yesterday announced that they will combine their consumer health businesses into a new joint venture with sales of approximately £9.8 billion ($12.7 billion).
The combination will bring together two highly complementary portfolios of trusted consumer health brands, including GSK’s Sensodyne, a dental hygiene range, Voltaren (diclofenac) and Panadol (paracetamol), and Pfizer’s Advil (ibuprofen), Centrum, a multivitamins brand, and calcium supplement brand Caltrate, GSK said.
The combined company will specialise in over the counter (OTC) products in areas including pain relief, respiratory, vitamin and mineral supplements, digestive health, skin health, and therapeutics.
Ian Read, chairman and CEO of Pfizer, said: “Pfizer and GSK have an excellent track record of creating successful collaborations, and we look forward to working together again to unlock the potential of our combined consumer healthcare businesses.”
Under the all-equity agreement, GSK will have a majority controlling equity interest of 68% in the joint venture, with Pfizer owning the remaining 32%.
It is expected to result in total annual cost savings of £500 million ($634 million) by 2022.
“The proposed all-equity transaction represents a compelling opportunity to build on the recent buyout of Novartis’ stake in GSK Consumer Healthcare, to create a new world-leading consumer healthcare business and to deliver further significant shareholder value,” GSK’s release said.
GSK bought Novartis out of their joint consumer healthcare business earlier this year for $13 billion. Months later, Novartis announced a clinical development agreement with Pfizer.
According to Pfizer, the board of directors of both companies have unanimously approved the transaction, and GSK said that the deal is expected to close during the second half of 2019 subject to shareholder and antitrust authority approvals.
The GSK-Pfizer joint venture has a limited life, with GSK explaining that it intends to separate the joint venture through a “demerger of its equity interest and a listing of GSK Consumer Healthcare on the UK equity market” within three years of the deal closing.
The two resulting companies can then be established with the appropriate capital structures for their future investment needs, GSK said.
Emma Walmsley, CEO of GSK, said: “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.”
News of the deal comes just weeks after GSK agreed to buy US oncology company Tesaro for $5.1 billion. Pfizer also recently entered into an oncology collaboration with Nektar Therapeutics, a US development stage biopharma company.
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