GSK pulls out of auction to buy $20bn Pfizer business

Katie Martin and Sarah Neville in London

March 23, 2018

GlaxoSmithKline has decided against pursuing Pfizer’s consumer healthcare business, throwing the prospects for a sale into serious doubt.

Rival Reckitt Benckiser pulled out of the process to buy the US pharma giant’s business on Thursday, leaving GSK seemingly poised to snap up the business. Pfizer hopes to secure as much as $20bn for the unit, which sells over-the-counter products including Advil painkillers and Centrum vitamins.

But on Friday, GSK’s chief executive Emma Walmsley said that while the group continued to “review opportunities that may accelerate our strategy, they must meet our criteria for returns and not compromise our priorities for capital allocation”.

People familiar with the process said GSK had undertaken due diligence on the deal but had ultimately decided not to make a bid.

GSK shares rose 3 per cent after the news on Friday morning as investors apparently rewarded a decision that some had seen as a distraction from the company’s focus on pharma.

GSK’s consumer healthcare business, which includes Aquafresh toothpaste and Night Nurse flu remedies, currently contributes roughly a quarter of its overall sales of just over £30bn. While buying the Pfizer business would have brought healthy cash flows, it may have meant less focus on developing a pipeline of new drugs.

Some investors were also worried that an acquisition of this size could jeopardise GSK’s dividend.

Analysts at Investec said that although they had been “comfortable” that the dividend was sustainable at the current 80p level even if GSK had acquired both Pfizer’s unit and the share in a joint consumer joint venture with Novartis that they do not currently own, “we see the news as a perceived positive”.

Let's block ads!(Why?)

Read again GSK pulls out of auction to buy $20bn Pfizer business : http://ift.tt/2Ghr9LT

Let's block ads! (Why?)