GSK tangoes with private equity players to explore $54B sale of consumer unit instead of IPO — report
The spinout of GlaxoSmithKline’s consumer health unit could reportedly take the form of a $54 billion sale to private equity firms.
It would mark a pivot from previous plans to turn that group into its own listed company — one in which current GSK shareholders can continue to own a stake — amid intense pressure from a pair of activist investors calling for a drastic shakeup at the top.
Advent International, CVC Capital Partners, KKR & Co and Permira are among potential suitors currently vetting the business, Bloomberg reported Tuesday, as are Blackstone and Carlyle Group, which have been heavily involved in life sciences deals in recent years.
Emma Walmsley first proposed separating the consumer health business from the pharma and vaccines development groups in 2018, a year or so into her CEO tenure. The first step was taking all its household brands — Sensodyne, Voltaren and Panadol — to form a joint venture with Pfizer, which contributed Advil, Centrum and Caltrate, among other products.
Since then, both herself and chairman Jonathan Symonds — a Big Pharma vet who was brought in largely to steer the consumer health split — have come under harsh scrutiny.
Elliott Investment Management was the first to call for Walmsley’s resignation. Known for its aggressive tactics, the firm was reported to have quietly built up a multibillion pound stake in GSK earlier this year, and over the summer it penned a strongly worded letter blasting the company’s current top team and outlining alternative ways to run the business.
One of those proposals was to simply sell the consumer health business, which GSK declined to take up in July (but also didn’t outright reject the idea, either).
Bluebell, another activist hedge fund, later joined the pressure campaign and called for the removal of Symonds on Tuesday.
By engaging with potential buyers of the consumer health unit without launching a formal auction process, GSK’s goal right now is to gauge whether it could achieve a higher valuation through an IPO or sale, Bloomberg reported.
Flush with cash, private equity players have shown interest in the healthcare space recently. The Carlyle Group has its fingers in several pots ranging from cell and gene therapy manufacturing to cardiology, and was spotted bidding against Philip Morris for the inhaler maker Vectura. Nick Galakatos’ Blackstone crew has also stacked up a slate of major pacts designed to finance drugmakers through some ambitious plans, while Advent International joined hands with Singapore’s GIC to take rare disease biotech Sobi private.