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Glaxo's Non-Core OTC Brands Update - Analyst Blog
4/24/2012 5:45:00 PM
GlaxoSmithKline plc ( GSK ) recently announced that it has reached an agreement with Aspen Pharmacare Holdings Limited to divest its non-core over-the-counter (OTC) brands sold in international markets. As per the terms of the agreement, Aspen Pharmacare will pay £164 million in cash to Glaxo. The deal is expected to complete in the second quarter of 2012.
The brands being sold to Aspen Pharmacare include Phillips MOM, Solpadeine, Dequadin, Cartia and Zantac. These brands collectively recorded sales of approximately £60 million in 2011. The net cash proceeds of £135 million from the deal will be passed on to shareholders during the year.
This divestment comes as a part of Glaxo's plan to divest non-core Consumer Healthcare OTC products, announced earlier in February 2011. The total annual sales of these products amounted to approximately £500 million. Glaxo has undertaken this divestment plan with the intention of channeling its focus on priority brands and markets.
In December 2011, Glaxo signed an agreement with Prestige Brands Holdings, Inc. ( PBH ) to divest non-core OTC brands sold in the US and Canada. The brands divested to Prestige Brands included BC, Goody's, Beano, Ecotrin, Fiber Choice and Tagamet.
As per the terms of the agreement, Prestige Brands paid £426 million in cash to Glaxo. The deal was completed in January 2012.
In March 2012, Glaxo reached an agreement with Omega Pharma to divest non-core OTC brands sold in Europe. As per the terms of the agreement, Omega Pharma will pay £391 million in cash to Glaxo. The brands being divested to Omega Pharma include Lactacyd, Abtei, Solpadeine, Zantac, Nytol and Beconase.
Glaxo is in the process of selling its global rights of alli. However, a supply disturbance has delayed Glaxo's plan.
We currently have a Neutral recommendation on Glaxo. The stock carries a Zacks #2 Rank (Buy rating) in the short run.
GLAXOSMITHKLINE ( GSK ): Free Stock Analysis Report
PRESTIGE BRANDS ( PBH ): Free Stock Analysis Report
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