Pfizer Inc (PFE) said on Thursday that it had closed its joint venture with GlaxoSmithKline plc (GSK), which is to combine the consumer healthcare businesses of the two companies to establish the largest over-the-counter business worldwide.
Under the terms of the agreement, Pfizer Inc is to have an equity stake of 32% in the joint venture, while GlaxoSmithKline plc is to own the remaining 68%.
Pfizer shares closed lower for the fifth time in the past nine trading sessions in New York on Thursday. The stock went down 1.52% ($0.59) to $38.25, after touching an intraday low at $37.68, or a price level not seen since July 25th 2018 ($37.56).
Shares of Pfizer Inc have retreated 12.37% so far in 2019 compared with a 17.82% gain for the benchmark index, S&P 500 (SPX).
In 2018, Pfizer Inc’s stock went up 20.51%, thus, it outperformed the S&P 500, which registered a 6.24% loss.
The combined business is to operate internationally as GSK Consumer Healthcare and is to be headed by GSKs Chief Executive Officer Brian McNamara.
Under the agreement, Pfizer has appointed 3 out of the 9 members of the joint venture’s board of directors. Those appointments include Douglas Giordano (Senior Vice President, Worldwide Business Development), John Young (Group President and Chief Business Officer) as well as Bryan Supran (Senior Vice President and Deputy General Counsel).
“The successful closing of the joint venture represents an important and exciting step in forming a world-class pure-play consumer healthcare business,” Albert Bourla, Pfizers Chief Executive Officer, said in a statement.
“It also furthers Pfizer’s evolution to be a more focused, global leader in science-based, innovative medicines that delivers breakthroughs that change patients’ lives and creates long-term value for shareholders,” Bourla added.
Meanwhile, GSK said that it intended to separate the joint venture as an independent company through a demerger of its equity interest to its shareholders. The entitys shares are to be listed on the UK equity market. GSK will need to decide if and when to initiate a separation and listing within a period of up to five years after the deal closes.
Analyst stock price forecast and recommendation
According to CNN Money, the 10 analysts, offering 12-month forecasts regarding Pfizer Inc’s stock price, have a median target of $42.00, with a high estimate of $53.00 and a low estimate of $38.00. The median estimate represents a 9.80% upside compared to the closing price of $38.25 on August 1st.
The same media also reported that at least 7 out of 13 surveyed investment analysts had rated Pfizer Inc’s stock as “Buy”, while 4 – as “Hold”.
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