American dream: Glaxo boss Emma Walmsley is keen to expand in the US
GlaxoSmithKlineis set for an £14billion swoop on the consumer healthcare arm of a rival as it fights to be a major player in the US.
The British firm is in pole position in the race for Pfizer’s business, which includes painkiller Advil and Chapstick lip balm.
Rivals including Johnson & Johnson, Sanofi and Nestle have pulled out, with Reckitt walking away yesterday. That might help Glaxo drive a hard bargain, although Pfizer says it could still decide not to sell.
A takeover is attractive for Glaxo because it would allow it to expand in North America, one of chief executive Emma Walmsley’s main aims since taking the reins.
But there are concerns about a deal, with investors worried it could distract from Walmsley’s mission to revamp Glaxo’s drugs arm. Analysts say it could also stretch the firm’s finances and threaten the dividend.
Walmsley has remained tight-lipped about her intentions. ‘You would expect us to have a look at it’, the 48-year-old said. ‘But, frankly, we don’t need to do this deal.’
Reckitt, whose brands include Nurofen and Clearasil, said it had wanted to buy just part of the Pfizer consumer healthcare business but had failed to strike a deal.
The failure to land a deal is a blow to chief executive Rakesh Kapoor who has long coveted the Pfizer operation as a means to bolster Reckitt’s business.
Shares in Reckitt rose 4.8 per cent, or 269p, to 5895p however, amid relief it will not be overstretching to complete a deal. Investors appeared less pleased that Glaxo was in poll position.
Its shares dipped 1.7 per cent, or 22.4p, to 1273.8p.
Russ Mould, an analyst at AJ Bell, said: ‘Given the weight of evidence suggests most acquisitions destroy rather than create shareholder value, the market reaction looks very rational.
‘Investors need to be wary of firms which make multiple acquisitions, especially if they are big and seen, or described, as transformational, as the scope for something going wrong is considerable.
‘This is something for investors in GlaxoSmithKline to bear in mind.’
Pfizer said it was looking at its options. ‘We have not yet made a decision, but continue to expect to make one in 2018,’ it added.
A decision to buy Pfizer’s takeover arm would be Walmsley’s boldest decision yet, after she launched a major overhaul at Glaxo.
Since taking over from Sir Andrew Witty a year ago she has vowed to whip the company into shape, poaching star executives from rivals, culling managers and prioritising research to replenish its crucial pipeline of medicines.
She he has also backed beefing up Glaxo’s consumer healthcare arm.
A deal with Pfizer would further increase the company’s leading position in the consumer health sector.
Glaxo yesterday declined to comment on the talks.