GSK to Divest Over-The-Counter Brands for £426 Million
GlaxoSmithKline yesterday announced that they are to divest a number of non-core over-the-counter (OTC) brands in the USA, Canada and Europe to Prestige Brands Holdings for £426 million.
The intention to divest the brands had been announced in February 2011, and was proposed to realise value for shareholders, and to simplify GlaxoSmithKline’s consumer healthcare business. It will also allow GSK to focus on their priority brands and markets.
The brands being divested include BC, Goody’s, Beano, Ecotrin, Fiber Choice and Tagamet, with generated sales of approximately £134 million in 2010 and £98 million in the first nine months of 2011.
The net cash proceeds from the transaction are expected to be approximately £242 million and these will be returned to shareholders during 2012.
The UK drug giant is also in the process of selling other brands outside the USA and Canada, including the weight loss drug Alli (orlistat), and their discussions with potential buyers continue.
Simon Dingemans, GSK’s chief financial officer, commented that “the disposal of our non-core consumer brands is about realising attractive value for shareholders as well as simplifying our ongoing consumer business and allowing it to focus on its priority brands and markets. I am pleased that we have achieved such a good result for our US and Canadian assets, especially in such difficult market conditions.”
A portfolio of nearly twenty brands has been identified by the company for divestment, which have an estimated value of up to $3.1 billion, and according to 2010 sales figures these products generated around £500 million, making up 10% of GSK’s total consumer healthcare business turnover.
The priority brand areas that GSK will now focus on include oral health, wellness/OTC and nutrition.