Friday, June 15, 2007
GSK Consumer Division Sell Off?
Pharmagossip has an interesting post regarding some GSK investors clamoring for a divestiture of GSK's Consumer Healthcare business. Pharmalyst thinks that this might be a good idea, especially if GSK can get the kind of multiple that Pfizer received for the sell off of their consumer division to JNJ (Approx 4 times revenues. See here).
Insider (author of PharmaGossip) has expressed his view: "It could all come down to "alli" and its performance in the US.
If early sales reports are correct and lots of people suffer "treatment effects" the bottom could fall out of GSK's market!"
Pharmalyst thinks that if Alli sells well (Day one sales look encouraging), then the pressure to sell this division will be greatly amplified due to the higher valuation that this division could command.
Who could pony up that kind of cash? Some of the folks who lost out to JNJ in the bidding wars for Pfizer's Consumer division would be interested in this....though Pharmalyst tends to doubt it. GSK's consumer division is much bigger than Pfizer's and the likes of Reckitt Benckiser can't probably afford it. However there are other players like P&G, Unilever and even Novartis, who may be interested in paying that kind of change and could afford it. Another probability of course is private quity (may be this will be one of ex AZ CFO Jon Symonds' early deals)....though looks like the private equity boom is ending given higher interest rates and the likes of Blackstone trying to cash out by dumping their shares to the public.
Will be interesting to see what kind of shareholder pressure the brass at GSK will face in the coming months.