GSK, Pfizer agree to merge consumer healthcare businesses; key things to know

By: |
December 19, 2018 2:43 PM

GSK said that it would own a controlling 68% equity stake in the proposed joint venture that will have combined sales of about 9.8 billion pounds.

Pfizer’s consumer healthcare division includes Centrum vitamins and Advil painkillers.

Pharmaceutical giant GlaxoSmithKline Wednesday announced to merge its consumer healthcare unit with that of its rival Pfizer Inc in an all-equity transaction. The merger would create the world’s biggest supplier of over-the-counter medicines with brands of painkillers such as Advil and Panadol. In a statement, GSK said that it would own a controlling 68% equity stake in the proposed joint venture that will have combined sales of about 9.8 billion pounds (approximately $12.7 billion). Rest of the stake will be held by Pfizer, the consumer healthcare division of which includes Centrum vitamins and Advil painkillers.

The British pharmaceutical major GSK plans to create two UK-listed global companies, one specialised in the development of drugs and the other in consumer healthcare within three years of completing the transaction, it added.

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“Within three years of the closing of the transaction, GSK intends to separate the joint venture via a demerger of its equity interest and a listing of GSK Consumer Healthcare on the UK equity market,” the statement said. “Over this period, GSK will substantially complete the integration and expects to make continued progress in strengthening its Pharmaceuticals business and R&D pipeline,” it added.

Further, it added that the merger was set to deliver cost savings of 500 million pounds by 2022 for expected total cash costs of 900 million and non-cash charges of 300 million. GSK plans divestments of some 1 billion pounds, the statement added.

It may be noted that London-based Unilever recently announced to merge GSK Consumer’s India business, including the popular Horlicks, Boost and other brands, after months of negotiations and a race against other global FMCG majors. HUL, the local arm of Unilever, the board approved the scheme of amalgamation with GSK Consumer India, under which the two companies will merge in EUR 3.3 billion deal.

The deal valued GSK Consumer India at Rs 31,700 crore and is expected to be complete in 12 months, subject to regulatory and shareholder approvals. The merger includes GSK entire operations of nutrition business and contracts to distribute its over-the-counter (OTC) and oral care brands such as Sensodyne, Eno and Crocin. Following the issue of new HUL shares, Unilever’s holding in HUL will be diluted from 67.2% to 61.9%.

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