GSK and Pfizer announce £9.8bn consumer health joint venture

Pharma giants GlaxoSmithKline plc (GSK) and Pfizer Inc are combining their consumer health businesses into a £9.8bn-turnover joint venture.

The deal, announced this morning (December 19), will see GSK take a controlling equity interest of 68% in the new venture to give Pfizer a 32% stake.

According to GSK, the JV will drive stronger sales, cash flow and earnings growth by leveraging the power of global brands, science-based innovation and multi-million pound cost synergies.

Its portfolio will include a lineup of complementary consumer health brands, including GSK’s Sensodyne, Panadol and Voltaren, and Pfizer’s Advil, Caltrate and Centrum.

The joint venture will aim to be a category leader in markets such as pain relief, vitamin and mineral supplements, skin health and digestive health.

Cost savings resulting from the tie-up are expected to amount to £500m by 2022, with up to 25% to be reinvested in the business, supporting innovation and growth opportunities.

GSK is expecting the proposed transaction to be transformational to the scale of its consumer healthcare business. The firm plans to separate the joint venture, within three years of closing on the transaction, by demerging its equity interest and listing GSK Consumer Healthcare on the UK equity market.

GSK chief exec Emma Walmsley said: “We have improved our operating performance and have set out a new approach to R&D.

“The transaction we have announced today is a unique opportunity to accelerate this work. Through the combination of GSK and Pfizer’s consumer healthcare businesses we will create substantial further value for shareholders.”

She continued: “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.

“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.”

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