GlaxoSmithKline plc (ADR) Stock Jumps on $13 Billion Novartis Deal

GlaxoSmithKline plc (ADR) (NYSE:GSK) stock was up today on news of a $13 billion deal with Novartis AG (ADR) (NYSE:NVS).

GlaxoSmithKline plc (ADR) Stock Jumps on $13 Billion Novartis Deal
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The deal will have GlaxoSmithKline plc (ADR) buying Novartis’ 36.5% stake in the Consumer Healthcare Joint Venture. This will have GSK taking over full ownership of the Consumer Healthcare business.

GlaxoSmithKline plc (ADR) says that the deal will allow its investors to gain from the full advantages of the business. It points out that the Consumer Healthcare Joint Venture is improving sales growth and operating margin to bring solid returns.

According to GlaxoSmithKline plc (ADR), the complete ownership of the Consumer Healthcare business will be accretive to adjusted earnings starting in 2018. It also notes that this will set it up to better meet its outlook for 2020.

GlaxoSmithKline plc (ADR) notes that it will need approval from regulators before it can complete the deal. This deal will also have to get approval from holders of GSK stock and NVS stock before it can close. The company expects to complete this deal sometime during Summer 2018.

The Consumer Healthcare Joint Venture was started by GlaxoSmithKline plc (ADR) and Novartis back in 2014. The original deal allows Novartis to require GSK to purchase its stake in the business from March 2, 2018 to March 2, 2035. The company is removing the uncertainty of this deal by choosing to buyout NVS’ remaining stake in the business now.

GSK stock was up 2% and NVS stock was largely unaffected by the news as of Tuesday morning.

As of this writing, William White did not hold a position in any of the aforementioned securities.

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