GSK share price: Pharmco plots buyout of Novartis’ consumer healthcare stake

on May 15, 2017
Updated: Oct 21, 2019

GlaxoSmithKline (LON:GSK) is preparing investors for an expansion of its consumer healthcare business through an £8-billion deal with Swiss rival Novartis, The Sunday Times has reported. The move will come after the two pharma giants created a consumer healthcare joint venture in 2014, as part of a larger asset swap deal.

GSK’s share price has fallen into the red this morning, having lost 0.66 percent to 1,654.00p as of 08:32 BST. The stock is underperforming the broader London market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.31 percent higher at 7,458.61 points. The group’s shares have added more than 13 percent to their value over the past year, and are up by some five percent in the year-to-date.

The Sunday Times reported yesterday that top GSK shareholders had claimed that they had been braced to expect the company to buy out Novartis’s 36.5-percent stake in the UK group’s Consumer Healthcare division. The joint venture was set up about three years ago, as part of a larger deal which saw the two drugmakers swap assets. The London-listed pharmco further has a provision of £8 billion in its accounts in relation to the likely deal with Novartis.
“They [Glaxo] have been consistent all along that this is a business they want to own, and will move forward when the time is right,” one GSK investor told the newspaper.
In a separate development, star fund manager Neil Woodford exited his stake in the UK group. In a blogpost entitled ‘Glaxit,’ he attributed his decision to the pharmco’s unwillingness to consider a break-up.
“Put simply, investing in Glaxo has been a frustrating experience, with three out of the four business units perennial underperformers,” he pointed out, adding that while some investors remained hopeful of recovery, he was now ‘less optimistic’.
As of 08:57 BST, Monday, 15 May, GlaxoSmithKline plc share price is 1,654.00p.

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