GlaxoSmithKline reaches agreement to divest majority of Classic Brands in Australia for £172m

GlaxoSmithKline plc (GSK) today announced that it has reached agreement to divest the majority of its “Classic Brands” (25 non-promoted and genericised products) in Australia to Aspen Global Incorporated (Aspen) for approximately £172 million in cash.

The divested brands include Valtrex, Lamictal, Timentin, Amoxil and Aropax and generated total sales of approximately £83 million in 2011 and approximately £31 million in the first half of 2012. Revenues for these products have gradually declined over recent years due to local market price reductions and generic competition. It is expected the divestment will complete in Q4 2012, subject to regulatory approvals.

The net cash proceeds from the transaction are expected to be approximately £155 million.

Net profit on this disposal in 2012 (after deducting transaction costs and a profit deferral of approximately £31 million pre-tax arising because Aspen is an associate of GSK) is estimated to be approximately £131 million (pre-tax), £121 million (post-tax) and will be recorded as a non-core item.

As with the divestment of its non-core over-the-counter (OTC) brands earlier in 2012, today’s announcement is an example of GSK’s commitment to realise value and enhance returns to shareholders through the sale of low growth or non-core businesses and to focus on priority brands, products and pipeline opportunities that have long term growth potential.