GSK healthcare products Sensodyne, Voltaren and Panadol will merge with Pfizer’s Advil, Centrum and Caltrate in a joint venture merger deal between the two firms that is set to create the world’s biggest seller of medicinal products.
The merger of the healthcare divisons of British phamarceutical GlaxoSmithKline and US firm Pfizer is expected to see sales of the joint drugmaker scale the heights of around the Ksh1 trillion mark.
In a statement by GSK, the British company said it will have a majority controlling equity interest of 68%, with American pharmaceutical Pfizer controlling the other 32%.
As per the statement, GSK has committed to pay a Ksh91 billion break fee in the event the deal does not go through.
GSK said the joint venture will increase cashflow and provide a pathway for the separation of its consumer healthcare division so as to “to build further support for investment in its R&D pipeline.”
“Within 3 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,” GSK said.
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According to the Sensodyne maker, the intended separation of the Group will allow the two resulting companies to be established with appropriate capital structures for their future investment needs and capital allocation priorities. This, the firm said, will support higher leverages than the GSK Group can currently.
GSK chief executive Emma Walmsley said, “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.”
The Panadol maker expects the deal to see a 7.3% market share in over the counter products, translating to a number 1 or 2 market share positions in all key geographies.
“The joint venture will be a category leader in pain relief, respiratory, vitamin and mineral supplements, digestive health, skin health and therapeutic oral health,” GSK said.
The joint venture will operate under the GSK Consumer Healthcare name in all territories where GSK and Pfizer have a presence, with the exception of GSK’s interest in its listed subsidiary in Nigeria which will be excluded from the joint venture.
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Until separation, the Joint Venture will be consolidated in GSK’s financial statements.
The joint venture will be subject to a shareholders’ agreement between GSK and Pfizer, under which GSK will have 6 directors and Pfizer 3 directors on its board.
Ms. Walmsley will be Chair of the new joint venture until separation, with GSK Executives Brian McNamara, currently CEO GSK Consumer Healthcare, and Tobias Hestler, currently CFO GSK Consumer Healthcare reprising their roles in the joint venture company.
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