GlaxoSmithKline and Novartis have completed their three-part transaction. As a result, GSK has acquired Novartis' global vaccines business (excluding influenza vaccines) for $5.25 billion and has divested its oncology business to Novartis for $16 billion. In addition, the two have created a new consumer healthcare joint venture in which GSK will have majority control and an equity interest of 63.5%.
The net after tax proceeds of the transaction received by GSK are estimated at $7.8 billion. GSK plans to use the transaction proceeds to fund the full amount of the previously announced capital return of $6 billion to shareholders. In light of the timing of the transaction, GSK intends to report its first quarter results for 2015 and hold an investor meeting in early May, at which it will provide 2015 earnings guidance and profile the medium and long-term shape and opportunities for the enlarged group.
Sir Andrew Witty, CEO of GSK, said, "Completion of this transaction represents a major step forward in the group's strategy to create a stronger and more balanced set of businesses across pharmaceuticals, consumer healthcare and vaccines. We will now be focused on rapidly implementing our integration plans to realize the growth and synergy opportunities we see in the new consumer healthcare and vaccines businesses."
Joseph Jimenez, CEO of Novartis, said, "The completion of the GSK transactions focuses Novartis and further establishes our leading positions in key growing business segments. We expect this evolution of our strategy to improve margin performance and position us well to meet future changes in the healthcare industry."
Since the end of 2013, Novartis has engaged in a series of transactions to sharpen its focus on three core business segments with global scale: innovative pharmaceuticals, eye care and generics.
As a result of the GSK transactions, Novartis Oncology now manages a portfolio of 22 oncology and hematology medicines to treat more than 25 conditions worldwide. Newly-acquired therapies in melanoma, renal cell carcinoma and hematology complement its existing group of practice-changing medicines. It is anticipated Novartis will be able to optimize the therapies acquired from GSK. These include: Tafinlar, a BRAF inhibitor, and Mekinist, a MEK inhibitor, both approved for metastatic melanoma; Votrient, a VEGFR inhibitor for renal cell carcinoma; Promacta for thrombocytopenia; Tykerb for HER2+ metastatic breast cancer and Arzerra in chronic lymphocytic leukemia.
Novartis also has opt-in rights for GSK's current and future oncology R&D pipeline (excluding oncology vaccines), which could be a source of new compounds and new targets. Sales of the acquired GSK oncology products in 2014 were approximately $2 billion.
GSK Consumer Healthcare, jointly formed by Novartis OTC and GSK Consumer Healthcare, is expected to have leading positions in four key OTC categories: wellness, oral health, nutrition and skin health.
Since 2013, Novartis has executed other strategic transactions to transform its portfolio. In January 2015, it completed the sale of its animal health business to Eli Lilly for $5.4 billion. In October 2014, it agreed to divest its influenza vaccines business to CSL $275 million, a transaction expected to close at the end of 2015. In January 2014, Novartis completed the sale of its blood transfusion diagnostics unit to Grifols $1.7 billion.