GSK completes major three-part transaction with Novartis

 £4 billion to be returned to shareholders

Q1 Results & Investor Meeting to be held on 6 May 2015

GlaxoSmithKline plc (LSE/NYSE: GSK) announces that its three-part transaction with Novartis has completed today.  As a result of this transaction, GSK has acquired Novartis's global Vaccines business (excluding influenza vaccines) for an initial cash consideration of $5.25 billion; has created a new world-leading Consumer Healthcare joint venture with Novartis in which GSK will have majority control and an equity interest of 63.5%; and has divested its Oncology business for an aggregate cash consideration of $16 billion.

The net after tax proceeds of the transaction received by GSK today are estimated to be $7.8 billion.  This reflects the full consideration of $16 billion paid today by Novartis for GSK's Oncology portfolio and related assets.  Under the terms of the transaction, up to $1.5 billion of that purchase price may have to be returned to Novartis if certain conditions relating to the COMBI-d Trial are not met.  Following the positive results from this study announced on 6 February 2015, GSK believes these conditions will be satisfied.

As a result, following today's completion, GSK plans to use the transaction proceeds to fund the full amount of the previously announced capital return of £4 billion to shareholders. Subject to shareholder approval, the capital return is expected to be implemented through a B share scheme, which will provide capital treatment for all UK tax-resident shareholders.  Further details on the capital return will be sent to shareholders in due course.

In light of the timing of closing the transaction, the Company intends to report its first quarter results for 2015 and hold an Investor Meeting on 6 May 2015, at which it will provide 2015 earnings guidance and profile the medium and long-term shape and opportunities for the enlarged Group.

Sir Andrew Witty, CEO, GSK said: "Completion of this transaction represents a major step forward in the Group's strategy to create a stronger and more balanced set of businesses across Pharmaceuticals, Consumer Healthcare and Vaccines. We will now be focused on rapidly implementing our integration plans to realise the growth and synergy opportunities we see in the new Consumer Healthcare and Vaccines businesses. We look forward to sharing more details of this with our shareholders on 6 May."

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Additional information
Whilst completion of the transaction with Novartis has taken place today, there are certain jurisdictions in which the transfer of relevant assets to or by GSK will only take place following receipt of additional market-specific approvals or other matters relevant to those jurisdictions.  The arrangements in relation to these jurisdictions are considered immaterial in the context of the transaction.  Terms defined in GSK's shareholder circular of 20 November 2014 have the same meaning where used in this announcement.