GSK to buy stake in Novartis consumer healthcare join venture for $13bn and considers selling Horlicks

GSK will take full control of Sensodyne toothpaste, Panadol headache tablets and Nicotinell patches

Last week, GSK quit its pursuit of rival Pfizer’s consumer healthcare business (AFP/Getty)

GlaxoSmithKline has agreed to splash out $13bn (£9.1bn) in cash to buy a 36.5 per cent stake currently owned by Swiss pharmaceuticals giant Novartis in a consumer healthcare joint venture between the two companies, and has said that it will launch a strategic review into some of its other businesses, including Horlicks.

FTSE 100-listed GSK said that under the deal, it will take full control of products including Sensodyne toothpaste, Panadol headache tablets and Nicotinell patches designed to help people quit smoking. The consumer healthcare joint venture was formed between Novartis and GSK back in 2015.

“The proposed transaction addresses one of our key capital allocation priorities and will allow GSK shareholders to capture the full value of one of the world’s leading consumer healthcare businesses,” said Emma Walmsley, chief executive officer of GSK.

“For the group, the transaction is expected to benefit adjusted earnings and cash flows, helping us accelerate efforts to improve performance,” she added.

She said that it will also remove “uncertainty” and will allow GSK to plan use of its capital for things like pharmaceuticals research and development.

Separately, GSK said that it was initiating a strategic review of Horlicks and its other consumer healthcare nutrition products to support funding of the transaction.

The majority of Horlicks and other nutrition product sales are generated in India, where products are sold by a company called GlaxoSmithKline Consumer Healthcare Ltd, which is listed on the National Stock Exchange and Bombay Stock Exchange. GSK owns a 72.5 per cent in that company.

Last week, GSK quit its pursuit of rival Pfizer’s consumer healthcare business. Pfizer had hoped that such a deal would bring in up to $20bn.

The Novartis transaction is currently expected to happen during the summer of this year, subject to regulatory approvals.

Novartis, which is based in the Swiss city of Basel, said that it would use the cash from the deal 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,” Novartis CEO Vas Narasimhan said.

“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."