GSK to sell US consumer brands to Prestige for $660m

In a move that has earned the British pharmaceutical manufacturer $660 million (£426 million), GlaxoSmithKline (GSK) has agreed to sell 17 of its consumer brands to Prestige Brands Holdings.

The sale the North American over-the-counter (OTC) products included BC and Goody’s (painkillers), the dietary supplements Beano and Fibre Choice, Ecotrin (aspirin) and gastrointestinal treatments Tagment and Gaviscon.  

GSK is expecting the sale to be finalised during the first six months of 2012 and the company is still in talks with other companies regarding the sale of some of its European consumer products.

Sales of various OTC products have been in the pipeline since February, when GSK announced it wanted to shed approximately 10 percent of its consumer portfolio so it could lend more of a focus to emerging markets and concentrate on larger priority brands.

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According to Prestige, it will start to see the benefits of the acquisitions in profit form in the next fiscal year, beginning on 1 April 2012.

Prestige’s purchase of the GSK brands, along with the acquisitions of Blacksmith Brand Holdings, children’s medicine brand PediaCare and Johnson & Johnson’s Dramamine, a motion sickness medication, has significantly boosted the company’s prospects.  

The company’s shares have risen to $11.3, an increase of 20 percent.

Commenting on the acquisition, the CEO of Prestige, Matthew Mannelly, said: “The signing of these agreements with GSK is a transformational event for Prestige Brands.

“It fulfills our commitment to create shareholder value by acquiring well-known OTC brands with strong consumer franchises and applying our marketing and sales expertise to them.”

He added: “These transactions, upon completion, will be the largest acquisitions of assets in the Company's history, following on the heels of our recent acquisitions of five brands from Blacksmith Brands and Dramamine(R) from Johnson and Johnson over the past year.

“We expect that upon completion, the transactions will give our Company a strengthened portfolio with total OTC revenues of approximately $500 million, as well as platforms to compete in two new categories: adult aspirin-based analgesics and gastrointestinal (GI).

Mannelly continued: “We believe the acquisitions are consistent with our strategic direction, fit with our fixed asset-light outsourced model, provide opportunities for certain cost savings, are financially attractive to shareholders, and will result in annual corporate revenues of approximately $600 million with an OTC business segment representing 85% of revenues and 90% of profits.”