03.27.18

Novartis to Sell Stake in Consumer Healthcare Joint Venture to GlaxoSmithKline for $13 Billion

Source: Novartis

Novartis announced that it has entered into an agreement with GlaxoSmithKline (GSK) to divest its 36.5 percent stake in its consumer healthcare joint venture to GSK for $13.0 billion. Novartis says the sale will enable the company to focus on the development and growth of its core businesses.

"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," Vas Narasimhan, CEO of Novartis, said in a company news release. "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 joint venture.

The consumer healthcare joint venture 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.

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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