GSK Walks Away From Acquiring Pfizer Consumer Goods Unit

Broken Deal

GlaxoSmithKline will not make a play for Pfizer’s consumer health business.

The British pharma giant’s decision came one day after another potential buyer, Reckitt Benckiser Group, announced that it would not seek to buy the Pfizer business unit, which is valued between $15 and $20 billion. Reckitt’s decision gave GSK a clear shot at acquiring the unit. This morning GlaxoSmithKline Chief Executive Officer Emma Walmsley issued a brief statement announcing the company was no longer a contender for the Pfizer business. That announcement came one day after multiple news outlets reported that GSK was working on a bid proposal.

“While we will continue to review opportunities that may accelerate our strategy, they must meet our criteria for returns and not compromise our priorities for capital allocation,” Walmsley said.

Shares of GSK jumped more than 4 percent to $37.79 in premarket trading after the company’s statement was released. GSK closed at $36.16 on Thursday. Some analysts had suggested that if GSK made a move it could stretch the company’s finances and possibly leave them in a vulnerable state.

Walmsley’s statement this morning echoed what she told reporters at the J.P. Morgan Healthcare conference in January when she said GSK did not need the Pfizer unit to bolster its business. In the year since Walmsley has been at the helm of GlaxoSmithKline, her primary focus has been the company’s pharma business. In separate news today GSK announced its shingles vaccine Shingrex was approved in Japan for patients 50 years old and older.

Pfizer’s consumer division contains a number of familiar brands that can be found in medicine cabinets across the globe. Some of those products include Advil, Robitussin, Chapstick lip balm and Preparation H. Some analysts believed the Pfizer consumer products unit would be a nice fit with GSK’s consumer unit, which includes products such as Aquafresh toothpaste, Breathe Right nose strips, Nicorette and Flonase.

Pfizer initially indicated that it was interested in a possible sale of its consumer division last year. In 2016 the business unit generated $3.4 billion in revenue for Pfizer.

Reckitt, a British consumer good group, was reportedly only interested in a portion of the Pfizer business unit.

Pfizer was expecting bids to be submitted for the acquisition of the consumer products unit on Thursday. The company has not indicated whether or not it received any bids. After Reckitt walked away Pfizer said it maintained a number of options for the unit, including a spin-off, sale or a decision to retain the business.

Back to news