GlaxoSmithKline gets shot of Quest Diagnostics shares for around $1.7 billion

UK pharma giant GlaxoSmithKline (LSE: GSK) this week said that it has sold its entire holding of 30,755,151 shares of common stock in Quest Diagnostics (NYSE: DGX), around 16.5% of the company, via a secondary public offering by GSK and an accompanying repurchase of shares by Quest. GSK originally acquired the shareholding - 29% - as partial consideration for the sale of its clinical laboratories business in 1999 and has since gradually reduced its stake in this business in stages.

The offering and repurchase are together expected to generate gross proceeds to GSK of approximately $1.7 billion. Net of tax, the London-headquartered drugmaker expects to receive cash proceeds of approximately $1.1 billion. Deutsche Bank Securities and JP Morgan Securities agreed to purchase from GSK the shares sold in the offering.

Commenting on the transaction, Julian Heslop, chief financial officer of GSK said: "Whilst we have been pleased with our investment in Quest Diagnostics, we have been considering the sale of our remaining position in the company for some time. We have decided that now is a good time to take advantage of favorable market conditions, thereby releasing funds from one of our non-core assets. This divestment demonstrates our focus on generating attractive returns for our shareholders and our ability to monetize significant gains when appropriate."