NVS Novartis AG

   By Nathan Allen 
 

GlaxoSmithKline PLC (GSK.LN) said Tuesday that it would buy out Novartis AG's (NOVN.EB) 36.5% stake in the consumer health-care joint venture operated by the two companies for $13 billion in cash, less than a week after GSK pulled out of the race to buy Pfizer Inc.'s (PFE) health-care unit.

Following completion, GSK said it expects the deal will be accretive to earnings in 2018 and will strengthen cash flow, while the business should post operating margins in the mid-20% range by 2022.

GSK said it will begin a strategic review of its Horlicks brand and other consumer-nutrition products with a view to funding transactions.

The joint venture was formed in 2015 between Novartis's over-the-counter business and GSK's consumer health-care unit, Novartis said.

"While our consumer health-care joint venture with GSK is progressing well, the time is right for Novartis to divest a non-core asset at an attractive price," Novartis's Chief Executive Vas Narasimhan said. The proceeds of the deal will be used to fund shareholder returns and pursue bolt-on acquisitions, he said.

Under the terms of the transaction, the joint venture's four Novartis-appointed directors will step down, Novartis said.

The deal, which is expected to close in the second quarter, is subject to approval from GSK shareholders.

Write to Nathan Allen at nathan.allen@dowjones.com

(END) Dow Jones Newswires

March 27, 2018 01:48 ET (05:48 GMT)

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