All The Details On GlaxoSmithKline Stock Spinoff
- Posted on June 23, 2021
- Stock Spinoff
- By Hannatu
GlaxoSmithKline (GSK) shares rose after the drug titan said it would spin off its consumer division and likely slash its dividend 31%.
The company unveiled the news at an investor update on Wednesday.
“The separation of Consumer Healthcare is expected in mid-2022,” the company said.
“The new Consumer Healthcare company will have a portfolio which generated annual sales of more than $14 billion in 2020 and is well-positioned for further growth.”
In April, media reports said activist investment firm Elliott Management had acquired a large stake in Glaxo, the size of which wasn't disclosed.
As for the dividend, GSK projects it will total $1.12 this year and then slide to 77 cents next year.
"New GSK will adopt a progressive dividend policy targeting a dividend payout ratio equivalent to 40% to 60%, starting at 45 pence per share in 2023, the company’s first full year of operation.”
Investors reacted positively to the news, with Glaxo recently trading at $40.83, up 4.5%. The stock has gained 8% over the past six months.
Glaxo also said it expected to widen its adjusted operating-profit margin from the mid-20s percent in 2021 to more than 30% by 2026.
And the new GSK "will prioritize R&D and commercial investment in vaccines and specialty medicines, which are expected to grow to around three-quarters of company sales by 2026.”
Earlier this month, Glaxo agreed to pay up to $2.1 billion for ITeos Therapeutics (ITOS) to develop cancer drugs.
The companies unveiled a deal to co-develop and co-commercialize EOS-448, a monoclonal antibody in Phase 1 development as a potential treatment for patients with cancer.
New GSK aims to sell the its remaining stake, described as a short-term investment, "in a timely manner," the group said. Based on brokerage Jefferies' valuation of 45 billion pounds for the whole consumer unit, that would be worth about 6 billion.
Pfizer, owner of the remaining 32%, has also said it would seek an exit.
"We will continue to monitor and evaluate all alternatives," it said on Wednesday.
Be the first to comment!
You must login to comment