GlaxoSmithKline (GSK) has set December 18 as the date for a General Meeting of its shareholders to consider and vote on the company’s proposed three-part transaction with Novartis that was announced earlier this year. Under the proposed deal, Novartis and GSK would combined their consumer heatlhcare businesses into a joint venture, GSK will divest its oncology products to Novartis, and GSK would acquire Novartis’ vaccine business (excluding flu). The companies announced the deal in April 2014.

GSK said that the proposed transaction is “the most significant transaction for the company since the creation of GSK in 2000 and is a major step towards fulfilling the company's strategy of creating a simpler, stronger, and more balanced platform for long-term growth.”

​Under the proposed deal, Novartis agreed to acquire GSK oncology products for a $14.5-billion payment and up to $1.5 billion contingent on a development milestone, the results of the COMBI-d trial, a Phase III study evaluating the safety and efficacy of the combination of two drug candidates to treat metastatic melanoma: Tafinlar and Mekinist  In addition, Novartis would have opt-in rights to GSK’s current and future oncology R&D pipeline.

Sales of the acquired GSK oncology products in 2013 were approximately $1.6 billion. Key products from GSK’s oncology portfolio are Tafinlar and Mekinist, Votrient (a VEGFR inhibitor for treating renal cell carcinoma), Tykerb (for treating HER2+ metastatic breast cancer), Arzerra (for treating chronic lymphocytic leukemia); and Promacta (for treating thrombocytopenia).

Novartis also has agreed to divest its vaccines business to GSK, excluding its flu business, for $7.1 billion plus royalties. The $7.1 billion consists of $5.25 billion upfront and up to $1.8 billion in milestones.The deal strengthens GSK’s position in pediatric and meningitis franchises, which include Bexsero, a new vaccine for prevention of meningitis B. 2013 actual net sales of Novartis’ vaccines (including flu) business were approximately $1.4 billion.

Novartis and GSK also have agreed to create a consumer healthcare business through a joint venture between Novartis OTC and GSK Consumer Healthcare. If approved, GSK will have majority control with an equity interest of 63.5%, and Novartis will own a 36.5% share of the joint venture. The joint venture of Novartis OTC and GSK Consumer Healthcare would establish a consumer healthcare company with $10 billion in annual sales positioned in four over-the-counter (OTC) categories: wellness, oral health, nutrition, and skin health. The joint venture would have several strong brands with almost half of the sales derived from brands larger than $300 million in annual revenue. The geographic footprint would have a commercial presence in the developed world as well as in key emerging markets, such as Brazil, China, Mexico, and Russia. Emma Walmsley has been appointed as chief executive officer designate of the new business and will be a member of its board. GSK CEO Andrew Witty will be chairman of the board. The board will comprise directors from both GSK and Novartis. Novartis will have four of eleven seats on the joint venture’s board. Furthermore, Novartis will have customary minority rights and exit rights at a pre-defined, market-based pricing mechanism.

If approved, subject to customary closing conditions, including antitrust review, the deal is expected to close in the first half of 2015.

Source: GlaxoSmithKline