GlaxoSmithKline Acquires Stiefel; Pound Falls

123jump.com Staff
20 Apr, 2009
New York City

In London benchmark index dropped 2.5% after an industry group revised its estimate of economic contraction and another group estimated 29,000 financial services job losses. GlaxoSmithKline agreed to acquire Stiefel for $3.6 billion and broaden its dermatology products.

[R]1:00PM New York, 6:00PM London- GlaxoSmithKline acquires Stiefel for $3.5 billion.[/R]

London stock indexes plunged 2.5% after prices of oil and base metal declined and the estimate of deeper recession from an industry group.

Crude oil prices shed $3 to $46.40 per barrel. However, gold stocks trimmed losses as gold prices increased $15 to 885.10 per ounce.

Confederation of British Industry revised its estimate of annual economy growth to negative 3.9% from an earlier estimate of 3.3%. Separately, the Center for Economic & Business Research Ltd. estimated that financial services companies will eliminate as many as 29,000 jobs in the current year.

In London trading FTSE 100 index declined 2.5% or 101.94 to 3,990.86. The pound declined to $1.453 from $1.4821 and weakened to 88.10 pence against euro from 88.20 pence.

Of the FTSE 100 index stocks, 9 gained and 93 declined. Randgold Resources Ltd. led advancers in the index with a rise of 8.4%.

GlaxoSmithKline Acquires Stiefel for $3.5 billion

GlaxoSmithKline (GSK) reported today that it has acquired GSK for $3.6 billion in a deal that will create a specialist dermatology business with revenues of $1.5 billion.

Through the deal, GSK will acquire the total share capital of Stiefel for a cash consideration of $2.9 billion and assume $400 million of net debt upon closing.

The company has also agreed to make additional payment of $300 million based on agreed upon future performance.

The combined companies will have a broad portfolio that includes Stiefel’s leading brands Duac, for acne, Olux E for dermatitis and Soriatane for the treatment of severe psoriasis and GSK’s key dermatology brands such as Bactroban, Cutivate and the recently launched Altabax.

Combining manufacturing and administrative functions are expected to have pre-tax cost savings of $240 million by 2012 with integration costs of approximately $325 million over the next 3 years.

GSK chief executive officer Andrew Witty said, ""The addition of Stiefel’s broad portfolio will provide immediate new revenue flows to GSK with significant opportunities to enhance growth through leveraging our existing global commercial infrastructure and manufacturing capability.""

U.K. Top Tax Rate Increase Questioned

Institute for Fiscal Studies announced today that Prime Minister Gordon Brown’s expected increase in the income tax rate to 45% is likely to reduce the government’s revenue.

The institute notes that the new rate that will be applied to annual salaries above £150,000 starting 2011 will make high earners move income to capital gains.

Gainers & Losers

Randgold Resources led advancers in the FTSE 100 index shares with a rise of 8.4% followed by increases in Centrica Plc of 1.5%, in Capita Group of 1.3%, in Royal Dutch Shell-B of 1.1%, and Bunzl Plc of 0.8%.

Randgold increased after gold prices edged up $15to $885.1 per ounce.

Eurasian Natural led decliners in the FTSE 100 index shares with a fall of 12.3% followed by losses in Thomas Cook Group of 11.4%, in Xstrata Plc of 11.1%, in ICAP Plc of 10.5%, and Lonmin Plc of 10.3%.

Energy stocks fell as crude oil prices dipped. Kazakhmys shed 9.7% and Vedanta Resources declined 8.7%.