GlaxoSmithKline sold off its stake in Quest Diagnostics--all 30,755,151 shares. GSK originally bought the 16.5 percent share of Quest back in 1999, but now wants to take advantage of "favorable market conditions" to cash out and turn a "non-core asset" into a return for shareholders.
"Whilst we have been pleased with our investment in Quest Diagnostics," CFO Julian Heslop said in a statement, "we have been considering the sale of our remaining position in the company for some time."
Perhaps that "return for shareholders" bit is what has some observers rubbing their hands in hopes of a share buyback program. GSK expected to net more than $1 billion cash from the Quest sale, AFP reports, with taxes taking a bite out of the $1.7 billion in gross proceeds. As Jefferies analysts said, the sales proceeds "should allow the company to restart its repurchase program."
A buyback plan might help sweeten the expected news that legal charges consumed most of GSK's fourth-quarter profits. GSK announced a £2.2 billion (about $3.5 billion) charge to cover the cost of more litigation over its diabetes drug Avandia and a potential settlement of a Justice Department investigation.
- check out the GSK release
- read the AFP story
- get more from the Evening Standard