GlaxoSmithKline divests batch of OTC brands for $660 million, but still more to go

The widely expected sale of UK pharma giant GlaxoSmithKline (LSE: GSK) non-prescription brands was confirmed this week when US consumer products group Prestige Brands Holdings (NYSE-PBH) said it had signed a definitive agreements with GSK to acquire 17 over-the-counter (OTC) pharmaceutical brands sold in North America for a total of $660 million in cash. The deal is expected to complete in the first half of next year.

GSK previously announced its intention to divest non-core Consumer Healthcare OTC products predominantly in the USA and Europe with aggregate annual sales of approximately £500 million ($776 million), hopefully in a single transaction. The products GSK wanted to divest made up 10% of GSK’s total Consumer Healthcare turnover and included analgesics: Solpadeine, BC and Goody’s; vitamin and supplement product Abtei; feminine hygiene treatment Lactacyd; and Alli (orlistat) for weight management (April 18). The latter is a notable exclusion from the Prestige deal, leaving GSK with an overhang to dispose of.

Matthew Mannelly, chief executive of the US company, stated: "The signing of these agreements with GSK is a transformational event for Prestige Brands. It fulfills our commitment to create shareholder value by acquiring well-known OTC brands with strong consumer franchises and applying our marketing and sales expertise to them. These transactions, upon completion, will be the largest acquisitions of assets in the company's history, following on the heels of our recent acquisitions of five brands from Blacksmith Brands and Dramamine from Johnson and Johnson over the past year. We expect that upon completion, the transactions will give our company a strengthened portfolio with total OTC revenues of approximately $500 million, as well as platforms to compete in two new categories: adult aspirin-based analgesics and gastrointestinal.