GSK’s drugs arm to get $11 bln windfall from consumer spin-off
June 23 (Businesshala) – GSK (GSK.L) on Wednesday planned to spin off its consumer health business into a separately listed company, aiming for a windfall profit of 8 billion pounds ($11 billion) in its pharmaceuticals business. drug development is to be strengthened.
Investors await details of the separation, which was first unveiled in December 2018 when GSK (GSK.L) agreed a joint venture for consumer brands such as Sensodyne Toothpaste and Advil Painkiller with Pfizer (PFEN). was expressed.
Demerger plans for the middle of next year will allow GSK to focus on growing a key drugs business, which has been hit hard by rapidly growing product shortages and postponing treatment for patients due to the COVID-19 pandemic. is.
Despite being the world’s largest vaccine maker, GSK has also been overtaken by companies such as Pfizer, Moderna (mRNA.o) and AstraZeneca (AZNL) to make a COVID-19 vaccine.
“I am well aware that GSK shares have underperformed over the long term,” CEO Emma Walmsley said at a news conference.
“Together, we are now ready to deliver a step-change in growth for New GSK and unlock the value of consumer healthcare,” said Walmsley, who plans to remain in place after the demerger.
Wolseley is under increasing pressure following a report in April that active investor Elliott had taken a multi-billion-pound stake in GSK.
Data from Refinitiv Eikon shows GSK’s valuation is currently at around 10.3 times its estimated core earnings, including net debt, which is more than 12 on average for global pharma majors.
Its shares, which have fallen about 14% over the past 12 months, rose 0.8% to 1,406.2 pence at 1055 GMT.
GSK forecasts that the pharmaceutical business will grow sales by more than 5% annually through 2026, roughly in line with analysts’ current expectations.
It said the business expected to receive a dividend of up to £8 billion from the consumer arm, which would have its listing on the London Stock Exchange.
As expected, consumer operations would take a greater share of the debt and the combined dividend of both businesses would be reduced.
This should help give the pharmaceutical business notably more scope to invest in drug development and deals.
GSK shareholders will receive stock in the new Consumer Health Group, which holds at least 80% of GSK’s current 68 percent stake. Pfizer holds the remaining 32%.
For New GSK to have even more financial fire power, it aims to sell off up to 20% of the remaining stake, viewed only as a short-term investment, “in a timely manner,” the group said.
($1 = 0.7161 pound)
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