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    GSK   GB0009252882

GLAXOSMITHKLINE PLC

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Analysts see possible windfall from GSK spin-offs

04/24/2013 | 11:54am EDT

LONDON (Reuters) - GlaxoSmithKline shareholders could be in line for a possible windfall after the drugmaker put two drinks brands up for sale and bundled some 50 old drugs into a new unit, analysts said.

The widely-expected sale of energy and fruit drinks Lucozade and Ribena could bring in some 1.2 billion pounds($1.8 billion), if the brands sell for twice the value of their annual sales, as some analysts expect.

The surprise move to bundle some established drugs into a new unit, meanwhile, could bring in substantially more. With sales last year of 3 billion pounds, those brands could generate proceeds of 9 billion to 12 billion pounds, said Panmure Gordon analyst Savvas Neophytou.

"Depending on tax implications of that sort of divestment, or spin-out, we may see an increased clamour for a special dividend in coming months," he said. "This should drive further outperformance."

Analysts at Berenberg and Jefferies also said the move was bound to fuel speculation that the business could ultimately be spun out from the group.

The new division housing GSK's established products will include older medicines that are no longer widely promoted, such as stomach acid treatments Tagamet and Zantac, Imitrex for migraine, and anti-nausea treatment Zofran.

The unit will report results separately from January 2014.

Chief Executive Andrew Witty said the creation of the separate business clearly increased the company's options.

"How it might play going forward is an open question," he said after announcing first-quarter results.

"This is a sensible move to ensure we are maximising value in the short run but, of course, it opens up optionality for us in the future."

An outright sale is not the only option. Other possibilities could include selling just some of the products in the unit or placing them into a joint venture with another company, as GSK has done already with its HIV/AIDS drugs via a deal with Pfizer and Shionogi.

($1 = 0.6542 British pounds)

(Reporting by Ben Hirschler; Editing by Elaine Hardcastle)

Stocks treated in this article : Shionogi & Co Ltd, GlaxoSmithKline plc, Pfizer Inc.

© Reuters 2013
Stocks mentioned in the article
ChangeLast1st jan.
GLAXOSMITHKLINE PLC 1.87% 1764 Delayed Quote.9.80%
SHIONOGI & CO., LTD. 0.41% 6776 Delayed Quote.-16.60%
All news about GLAXOSMITHKLINE PLC
05/20Deutsche Bank Keeps GSK At Hold, Boosts PT
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Analyst Recommendations on GLAXOSMITHKLINE PLC
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Financials
Sales 2022 36 543 M 45 551 M 45 551 M
Net income 2022 5 289 M 6 593 M 6 593 M
Net Debt 2022 17 655 M 22 006 M 22 006 M
P/E ratio 2022 16,6x
Yield 2022 2,98%
Capitalization 89 279 M 111 B 111 B
EV / Sales 2022 2,93x
EV / Sales 2023 2,78x
Nbr of Employees 90 096
Free-Float 93,6%
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Mean consensus OUTPERFORM
Number of Analysts 22
Last Close Price 1 764,00 GBX
Average target price 1 865,77 GBX
Spread / Average Target 5,77%
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Managers and Directors
Emma N. Walmsley Chief Executive Officer & Executive Director
Iain James Mackay Chief Financial Officer & Executive Director
Jonathan Richard Symonds Non-Executive Chairman
Hal V. Barron Executive Director & Chief Scientific Officer
Jon Ellis VP & Head-Technology Business Development
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