Novartis to sell stake in consumer healthcare joint venture to GSK

Focussing on strategic priorities

27-Mar-2018 - Switzerland

Novartis announced that it has entered into an agreement with GlaxoSmithKline plc (GSK) to divest its 36.5 percent stake in its consumer healthcare joint venture (JV) to GSK for USD13.0 billion. The sale will enable Novartis to further focus on the development and growth of its core businesses.

Vas Narasimhan, CEO of Novartis, said: "While our consumer healthcare joint venture with GSK is progressing well, the time is right for Novartis to divest a non-core asset at an attractive price. This will strengthen our ability to allocate capital to grow our core businesses, drive shareholder returns, and execute value creating bolt-on acquisitions as we continue to build the leading medicines company, powered by digital and data."

The joint venture was formed in 2015 as part of Novartis' portfolio transformation, which comprised a three-part inter-conditional transaction with GSK, including the combination of the Novartis Over-the-Counter (OTC) business with the GSK consumer healthcare business into the existing JV.

The consumer healthcare JV investment is accounted for in Novartis' financial reporting using the equity method of accounting, whereby the Company's share of the net income is reported as income from associated companies.

Deal terms

GSK has agreed to pay a cash consideration of USD13.0 billion for Novartis' stake in the consumer healthcare joint venture.

The valuation, which was agreed by both parties, reflects the significant value created by the JV under the guidance of the joint JV Board and management team.

Four of the 11 directors of the joint JV Board are appointed by Novartis. They will step down in connection with the completion of the transaction.

The transaction is subject to GSK shareholder approval. Proceeds in cash are expected to be received once all closing conditions are fulfilled. 

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