GSK on track with consumer split as buyout report boosts shares

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(Businesshala) – GlaxoSmithKline is “strongly on track” to shut down its consumer health business next year, the British drugmaker said on Tuesday after Businesshala News reported that the unit said bids from private equity firms such as Advent, CVC and KKR can attract.

FILE PHOTO: A GlaxoSmithKline plant is seen in Montrose, Scotland, Britain October 22, 2018. Andy Buchanan/Pool via Businesshala

Citing unidentified people with knowledge of the matter, the report said the unit that manufactures Sensodyne toothpaste and Advil and Panadol painkillers may also draw interest from large pharmaceutical and consumer goods companies.

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It said the unit could be valued at 40 billion pounds ($54 billion) or more.

A GSK spokesperson declined to comment on whether the company has received an acquisition interest in a joint venture division with US drugmaker Pfizer.

The report sent shares of London-listed GSK up 4.8% to 1,460.2 pence.

“GSK is very much ahead with its plan to differentiate Consumer Healthcare,” a GSK representative said.

The company planned to convert the consumer arm into a separate listed company in June to focus on its underperforming drugs business, and has defended those plans after active investor Elliott suggested some changes, including GSK Consumer. The business was open to potentially selling.

A GSK spokesperson said, “The feedback we have received from our shareholders is that they want to adopt the new consumer healthcare company as a listed entity through demerger. will fulfill his fiduciary duties.” .

Under GSK’s plan, shareholders will receive an amount of at least 80% of the 68 per cent stake in the new Consumer Health Group, which is currently held by GSK. The remaining 32% is with Pfizer.

The group has said that the new GSK will sell the remaining 20% ​​stake “in a timely manner”. Pfizer has also said that it will try to exit its shareholding.

Elliott, which in July was confirmed to hold a significant stake in GSK, said then that a conservative estimate would put GSK’s stake in the consumer unit at around £34 billion — about £50 billion in total.

Brokerage Jefferies has estimated its value at 45 billion pounds.

Another active investor, Bluebell Capital Partners, which holds a small stake in GSK, said last month that the consumer arm should attract interest from business buyers and potentially private equity investors.

Elliott has said that the sale of the unit to an industry peer would command a “meaningful premium” over its estimated value because of the potential synergies of up to 10% of the business’s revenue.

Separately, Bluebell said in an open letter to GSK President Jonathan Symonds on October 11, that both he and chief executive Emma Walmsley should be replaced, expressing disappointment over the October 7 investor incident.

“We strongly reject the content and claims made in this letter, which do not represent the views discussed at the meeting or the views of our majority shareholders,” GSK said in response.

Reporting by Pushkala Aripaka in Bengaluru and Ludwig Berger in Frankfurt; Editing by Bernadette Baum and Mark Potter

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