* GSK consumer arm to be demerged in middle of 2022
* Drugs business to get 8 bln stg dividend from consumer arm
* Lower debt ratio, dividend to boost finances of drugs arm
(Adds CEO comment, detail, background)
By Ludwig Burger and Pushkala Aripaka
June 23 (Reuters) - GSK set out plans on Wednesday
to turn its consumer healthcare business into a separately
listed company, aiming to strengthen drug development at its
pharmaceuticals business with an 8 billion pound ($11 billion)
windfall.
Investors have been waiting for details of the separation,
which was first unveiled in December 2018 when GSK
agreed a joint venture for consumer brands such as Sensodyne
toothpaste and Advil painkillers with Pfizer.
The demerger planned for the middle of next year will allow
GSK to focus on bolstering a core drugs business, which has been
hit by a lack of fast-growing products and patients deferring
treatments due to the COVID-19 pandemic.
Despite being the world's biggest vaccines maker, GSK has
also been beaten by the likes of Pfizer, Moderna and
AstraZeneca to making a COVID-19 vaccine.
"I am very aware that GSK shares have underperformed for a
long period," CEO Emma Walmsley told a news conference.
"Together, we are now ready to deliver a step-change in
growth for New GSK and unlock the value of Consumer Healthcare,"
added Walmsley, who plans to stay on after the demerger.
Pressure has been increasing on Walmsley following a report
in April that activist investor Elliott had taken a
multibillion-pound stake in GSK.
SALES GROWTH
GSK is currently valued at about 10.3 times its forecast
core earnings, including net debt, below an average of more than
12 for global pharma majors, Refinitiv Eikon data shows.
Its shares, which have fallen about 14% over the past 12
months, were up 0.8% to 1,406.2 pence at 1055 GMT.
GSK forecast the pharmaceuticals business would increase
sales by more than 5% a year to 2026, broadly in line with
analysts' current expectations.
It said that business was expected to receive a dividend of
up to 8 billion pounds from the consumer arm, which will have
its own listing on the London Stock Exchange.
As expected, the consumer operations will take on a higher
share of debt and the combined dividend of the two businesses
will be reduced.
That should help to give the pharmaceuticals business in
particular more scope to invest in drug development and deals.
GSK shareholders will receive stock in the new consumer
healthcare group amounting to at least 80% of the 68% stake that
GSK currently owns in it. Pfizer has the remaining 32%.
For even more financial fire power for New GSK, it aims to
sell the remaining stake of up to 20%, seen only as a short-term
investment, "in a timely manner," the group said.
($1 = 0.7161 pounds)
(Reporting by Pushkala Aripaka in Bengaluru and Ludwig Burger
in Frankfurt
Editing by Mark Potter and Keith Weir)
Glaxosmithkline (GSK)
Astrazeneca (AZN)