Establishes a new focused global consumer healthcare business with
the independence and sustainability to deliver significant value
Equity split of 32% Pfizer and 68% GlaxoSmithKline
NEW YORK--(BUSINESS WIRE)--
Pfizer Inc. (NYSE: PFE) and GlaxoSmithKline plc (NYSE:GSK) today
announced they have entered into an agreement to create a premier global
consumer healthcare company with robust iconic brands. The Boards of
Directors of both companies have unanimously approved the transaction
under which Pfizer will contribute its consumer healthcare business to
GlaxoSmithKline’s existing consumer healthcare business. The 2017 global
sales for the combined business were approximately $12.7 billion.
“We are pleased to announce this new joint venture for Pfizer Consumer
Healthcare, delivering on our commitment to complete the strategic
review for this business in 2018,” stated Ian Read, Chairman and current
Chief Executive Officer, Pfizer. “Pfizer and GSK have an excellent track
record of creating successful collaborations, and we look forward to
working together again to unlock the potential of our combined consumer
healthcare businesses.”
Under the terms of the transaction, Pfizer will receive a 32% equity
stake in the joint venture, entitling Pfizer to its pro rata share of
the joint venture’s earnings and dividends, which will be paid on a
quarterly basis. Pfizer will have the right to appoint three out of the
nine members of the joint venture’s board. The transaction is expected
to deliver $650 million in peak cost synergies and to be slightly
accretive for Pfizer in each of the first three years after the close of
the transaction, which is anticipated during the second half of 2019,
subject to receipt of GSK shareholder approval and regulatory approvals,
and satisfaction of other customary closing conditions.
As Pfizer will own less than 50% of the joint venture, Pfizer
anticipates deconsolidating Pfizer Consumer Healthcare from its
financial statements following the closing of the transaction. In the
near- to medium-term, this deconsolidation is not expected to have a
material impact on Pfizer’s top-line growth. In addition, given the
Consumer Healthcare business records lower margins than Pfizer’s other
businesses, the deconsolidation is expected to have a slight positive
impact on Pfizer’s operating margins over the next several years.
Following the integration of the combined business, GSK intends to
separate the joint venture as an independent company via a demerger of
its equity interest to its shareholders and a listing of the Consumer
Healthcare business on the UK equity market. GSK will have the sole
right to decide whether and when to initiate a separation and listing
for a period of five years from closing of the proposed transaction. GSK
may also sell all or part of its stake in the joint venture in a
contemporaneous IPO.
Should a separation and listing occur during the first five years after
closing, Pfizer has the option to participate through the distribution
of its equity interest in the joint venture to its shareholders or the
sale of its equity interest in a contemporaneous IPO. After the fifth
anniversary of the closing of the proposed transaction, both GSK and
Pfizer will have the right to decide whether and when to initiate a
separation and public listing of the joint venture.
“The combination of these leading businesses with distinct regional and
category strengths will be more sustainable and broader in scope than
either company individually,” said Albert Bourla, Chief Operating
Officer and incoming Chief Executive Officer, Pfizer. “We believe that
this joint venture is a great opportunity to ensure the future success
of Pfizer Consumer Healthcare while unlocking meaningful after-tax value
for Pfizer shareholders.”
The joint venture will be a category leader in pain relief, respiratory,
vitamin and mineral supplements, digestive health, skin health and
therapeutic oral health and will be the largest global consumer
healthcare business. In addition, the joint venture is expected to be
the first or second largest consumer healthcare player in key
geographies, including the United States, Europe, China, India and
Australasia. The joint venture will operate globally under the GSK
Consumer Healthcare name.
“The transaction is a testament to the success of our Consumer
Healthcare business, including its excellent reputation, talented
colleagues, high-quality products and market reach,” said Chris Slager,
President, Pfizer Consumer Healthcare. “The dedication and hard work of
the Pfizer Consumer Healthcare team is impressive and inspiring. I am
proud of our colleagues around the world who are passionate about the
success of this business and the important role it plays in empowering
consumers to take health and wellness into their own hands.”
Emma Walmsley, GSK CEO, will be Chair of the new joint venture. Brian
McNamara, currently CEO GSK Consumer Healthcare, will be CEO of the new
joint venture and Tobias Hestler, currently CFO GSK Consumer Healthcare,
will be CFO.
Until separation, the joint venture will be consolidated in GSK’s
financial statements.
For the year ended December 31, 2017, the Pfizer Consumer Healthcare
business recorded revenues of approximately $3.5 billion and the GSK
Consumer Healthcare business recorded revenues of approximately $9.2
billion.
GSK has agreed to pay a break fee of $900 million if (i) the GSK Board
of Directors changes, withdraws or qualifies its recommendation of the
transaction to its shareholders for approval; (ii) GSK’s shareholders
vote on the proposed transaction and do not approve it; or (iii) GSK’s
shareholders do not approve the proposed transaction by September 30,
2019 (subject to extension in certain circumstances).
Centerview Partners LLC, Guggenheim Securities, LLC and Morgan Stanley &
Co. LLC served as Pfizer’s financial advisors, Wachtell, Lipton, Rosen &
Katz, and Clifford Chance LLP served as its legal advisors, and Skadden,
Arps, Slate, Meagher & Flom LLP served as its tax advisor.
DISCLOSURE NOTICE: The information contained in this
release is as of December 19, 2018. Pfizer assumes no obligation to
update forward-looking statements contained in this release as the
result of new information or future events or developments.
This release contains forward-looking information related to Pfizer,
Pfizer’s and GSK’s consumer healthcare businesses and an agreement to
create a joint venture to combine Pfizer’s and GSK’s consumer healthcare
businesses that involves substantial risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied by such statements. Forward-looking statements in this release
include, among other things, statements about the potential benefits of
the proposed joint venture and transaction, anticipated accretion and
cost savings, the companies’ plans, objectives, expectations and
intentions, the financial condition, results of operations and business
of the proposed joint venture, the proposed joint venture’s products and
potential, the anticipated impact of the deconsolidation of the Pfizer
Consumer Healthcare business from Pfizer’s financial statements, GSK’s
future plans to separate the joint venture as an independent company,
and the anticipated timing of closing of the transaction. Risks and
uncertainties include, among other things, risks related to the
satisfaction of the conditions to closing the transaction (including the
failure to obtain necessary regulatory and GSK shareholder approvals) in
the anticipated timeframe or at all and the possibility that the
transaction does not close; risks related to the ability to realize the
anticipated benefits of the transaction, including the possibility that
the expected benefits and cost savings from the proposed transaction
will not be realized or will not be realized within the expected time
period; the risk that the businesses will not be integrated
successfully; the possibility that a future separation of the joint
venture may not occur; disruption from the transaction making it more
difficult to maintain business and operational relationships; negative
effects of the announcement or the consummation of the proposed
transaction on the market price of Pfizer’s common stock and on Pfizer’s
operating results; significant transaction costs; unknown liabilities;
the risk of litigation and/or regulatory actions related to the proposed
transaction; other business effects, including the effects of industry,
market, economic, political or regulatory conditions; future exchange
and interest rates; changes in tax and other laws, regulations, rates
and policies; future business combinations or disposals; and competitive
developments.
A further description of risks and uncertainties can be found in
Pfizer’s Annual Report on Form 10-K for the fiscal year ended December
31, 2017 and in its subsequent reports on Form 10-Q, including in the
sections thereof captioned “Risk Factors” and “Forward-Looking
Information and Factors That May Affect Future Results,” as well as in
its subsequent reports on Form 8-K, all of which are filed with the U.S.
Securities and Exchange Commission and available at
www.sec.gov
and
www.pfizer.com
.
Revenues of GSK’s Consumer Healthcare business included in this
release were provided by GSK Consumer Healthcare management and
converted from pounds sterling to U.S. dollars at an exchange rate of
1.30.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181218005970/en/
Pfizer U.S. Media Contact:
Joan Campion
212.733.2798
Joan.Campion@pfizer.com
Pfizer Europe Media Contact:
Andrew Widger
M: +44-1737-330-909
E:
Andrew.Widger@pfizer.com
Investor Contact: Chuck Triano
212-733-3901
Charles.E.Triano@pfizer.com
Source: Pfizer Inc.