Pfizer, GSK Complete Closing of OTC Joint Venture

Pfizer has completed the closing of its joint venture with GlaxoSmithKline (GSK) that combines the companies’ respective consumer healthcare businesses. Pfizer owns a 32% equity stake in the joint venture and GSK 68%. The combined business, which will operate globally as GSK Consumer Healthcare, will be led by Brian McNamara, now current CEO of GSK Consumer Healthcare.

The combined brand portfolio forms an over-the-counter (OTC) business with positions in pain relief, respiratory and vitamins, minerals and supplements, and therapeutic oral health. The two businesses will hold the number one OTC position in the US and the number two OTC position in China, according to information from the companies.

Under the agreement, three out of the nine members of the joint venture’s board have been appointed by Pfizer, including John Young, Group President, Chief Business Officer; Douglass Giordano, Senior Vice President, Worldwide Business Development; and Bryan Supran, Senior Vice President, Deputy General Counsel.

The transaction is expected to deliver $650 million in peak cost synergies and to be slightly accretive on a full-year basis for Pfizer in each of the first three years following the closing.

GSK says it 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 joint venture 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 following the closing. GSK may also sell all or part of its stake in the joint venture in a contemporaneous initial public offering (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, both GSK and Pfizer will have the right to decide whether and when to initiate a separation and public listing of the joint venture.

Source: Pfizer, GlaxoSmithKline

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