GlaxoSmithKline PLC agreed to buy out Novartis AG’s stake in their consumer-health joint venture for US$13 billion, days after abandoning its pursuit of a similar unit put on the block by Pfizer Inc.
The transaction gives Glaxo full control of a business that sells Theraflu cold medicine and Panadol pain relievers while arming Novartis with more firepower for its pharmaceutical operations and acquisitions. It is the first big strategic move for new chief executive officers at two of Europe’s largest drug companies.
Glaxo chief executive officers Emma Walmsley, who took over last year, has emphasized the benefit of having the pharmaceutical, vaccine and consumer businesses under one umbrella, partly due to the drug industry’s volatility.
Her counterpart at Novartis, Vas Narasimhan, who rose to the top spot last month, said the over-the-counter business is no longer central to the Swiss company’s strategy.
Glaxo shares rose as much as 2.8 percent early yesterday in London, while Novartis rose as much as 2 percent in Zurich, Germany.
The consumer health sector has experienced pressure on prices as drugstores and other retailers vie to get shoppers.
Glaxo’s investors balked last year when Walmsley mentioned interest in the Pfizer unit, fearing that it might endanger the British drugmaker’s dividend.
Novartis had the right, starting this month, to require Glaxo to purchase its stake in the venture. The new agreement removes uncertainty surrounding that option, Glaxo said yesterday.
The consumer business expects operating margins to improve and approach “mid-20s” percentages by 2022, Glaxo said.
The sale of the 36.5 percent stake in the venture, which was formed in 2015, should close in the second quarter, Basel, Switzerland-based Novartis said yesterday in a statement.
The sale would also strengthen Novartis’s ability to drive shareholder returns and make bolt-on acquisitions, Narasimhan said in the statement.
“While our consumer healthcare joint venture with GSK is progressing well, the time is right for Novartis to divest a noncore asset at an attractive price,” Narasimhan said.
Narasimhan is focusing on finding breakthrough drugs for cancer and other diseases. Novartis reiterated in January that a decision on whether to spin-off the Alcon eye-care division probably would not come before the first half of next year.
Glaxo is starting a review of its Horlicks unit and other consumer-health nutrition products to help fund the transaction and increase focus on the over-the-counter and oral-health categories. The company expects to conclude that process around the end of this year.
Glaxo pulled out of the contest for Pfizer’s consumer-health unit last week in a development that leaves the US drugmaker with dwindling options to dispose of the business, which is valued at as much as US$20 billion.
One factor in Glaxo’s decision not to pay the price Pfizer wanted was a potential transaction to buy out the Novartis holding, analysts at Bloomberg Intelligence wrote last week.
Glaxo had said it would be interested in acquiring the stake if Novartis exercised its option to sell.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary
RSS