PLC said Tuesday it would buy
36.5% stake in the consumer health joint venture operated by the two companies for $ 13 billion in cash, less than one Week after the departure of GSK Buy
Health Care Unit.
Following the closing, GSK said that the 2018 business will make a positive contribution to earnings and strengthen cash flow, while by 2022 the company should achieve operating margins in the mid 20% range.
GSK said it will begin a strategic review of its Horlicks brand and other consumer nutrition products with a view to financing transactions.
The joint venture was formed in 2015 between Novartis' inpatient business and GSK's Consumer Health Care department, Novartis said.
"While our joint venture with GSK in health care is making good progress, Novartis has the time to sell a non-core asset at an attractive price," said Novartis CEO Vas Narasimhan. The proceeds from the transaction will be used to fund shareholder returns and track acquisitions, he said.
Under the transaction, the four Novartis board members of the joint venture will resign, Novartis said.
The transaction, which is expected to close in the second quarter, is subject to the approval of GSK shareholders.