Glaxo/Pfizer Consumer Healthcare Joint Venture Spin-off Notes

February 3, 2021 – Update

Article arguing GSK is undervalued.
Spin-off won’t become publicly traded until July 2022
This a good article diving into what the consumer business should be valued at.
- Author argues GSK share of consumer business should be worth 35.7 billion GBP assuming it trades at P&G’s multiple.

- He values the pharma and vaccine business at an EV/EBIT multiple of 17x which yields an enterprise value of 122.3 billion GBP.

- Factoring 23 billion GBP of debt and fair enterprise value is ~158 billion GBP versus current enterprise value of 94 billion GBP.
- Looks interesting. In the meantime GSK pays a 5% dividend.
- Using the assumptions above, looks like there is almost 100% upside. I need to double check all these assumptions, but it looks interesting.

December 16, 2020 – Update

December 19, 2019 – Update

On December 19, 2018, GlaxoSmithKline (GSK) and Pfizer (PFE) announced that they would be merging their consumer health businesses into a joint venture. The joint venture is expected to close in the second half of 2019.
Within three years of closing, the joint venture will be spun off into a separate public company. The joint venture will have sales of $12.7BN. GSK will have a 68% controlling equity stake while PFE will own the remaining 32%. The combination will bring together a large category of consumer health brands, including GSK’s Sensodyne, Voltaren and Panadol and Pfizer’s Advil, Centrum, and Caltrate.
The Joint Venture will be the global leader in OTC products with a market share of 7.3% ahead of its nearest competitor at 4.1%.
Overview of transaction.