GlaxoSmithKline agrees major business restructuring deal with Novartis

GlaxoSmithKline has agreed a multibillion-pound deal with Novartis that will affect the structure and management of their consumer healthcare, vaccines and oncology units.

The three-part inter-conditional transaction will see the firms create a world-leading joint consumer healthcare business, with GlaxoSmithKline taking a majority stake. It can boast 2013 pro forma revenues of 6.5 billion pounds.

Meanwhile, the firm will purchase Novartis' global vaccines business – excluding influenza products – for an initial cash consideration of $5.25 billion (3.12 billion pounds), with subsequent potential milestone payments of up to $1.8 billion and ongoing royalties.

Finally, GlaxoSmithKline will be selling its oncology business – including its current marketed portfolio, related research and development activities, AKT inhibitor rights and partnership interests – for an aggregate cash consideration of $16 billion.

Sir Andrew Witty, chief executive officer at GlaxoSmithKline, said: "We will expand our portfolio to both help treat illness and prevent disease, and we will broaden our scope to improve human health with the acquired research and development and innovation expertise."

The firm has been seeking to refine the focus of its business by selling off non-core brands in recent months, leading to the sale of its Lucozade and Ribena products earlier this year.