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GSK to acquire oncology specialist Tesaro in $5.1 billion deal

The pharmaceutical giant looks to boost its oncology drugs pipeline with its acquisition of Tesaro and is the company’s first major acquisition under the stewardship of new CEO Emma Walmsley.

GlaxoSmithKiline (GSK)
Source: Bloomberg

GlaxoSmithKline(GSK) announced it will acquire oncology focused biopharmaceutical company TESARO for an aggregate cash consideration of around $5,1 billion.

The proposed transaction will see GSK strengthen its pharmaceutical business, particularly its pipeline and commercial capabilities around cancer treatment and prevention.

‘The acquisition of TESARO will strengthen our pharmaceuticals business by accelerating the build of our oncology pipeline and commercial footprint, along with providing access to new scientific capabilities,’ CEO at GSK Emma Walmsley said. ‘This combination will support our aim to deliver long-term sustainable growth and is consistent with our capital allocation priorities.’

‘We look forward to working with TESARO’s talented team to bring valuable new medicines to patients,’ she added.

Tesaro deal in focus

The acquisition price of $75 a share, represents a 110% premium to Tesaro’s 30-day volume weighted average price of $35.67, GSK said in their deal announcement on Monday.

GSK expects the acquisition of TESARO and associated R&D and commercial investments will impact Adjusted EPS for the first two years by mid to high single digit percentages, reducing thereafter with the acquisition expected to start to be accretive to Adjusted EPS by 2022.

GSK’s guidance for full-year 2018 Adjusted EPS growth remains unchanged at 8 to 10% at CER. GSK continues to expect to deliver on its previously published Group Outlooks to 2020, but following the acquisition of TESARO now expects Adjusted EPS growth at CER for the period 2016-2020 to be at the bottom end of the mid to high single digit percentage CAGR range

‘This transaction marks the beginning of a new global partnership that will accelerate our oncology business and allow our mission of delivering transformative products to individuals living with cancer to endure,’ CEO of Tesaro Lonnie Moulder said.

‘Our Board and Management team are very pleased to announce this transaction, and we are grateful to the management team at GSK for their tremendous vision and the opportunity to preserve and build upon the impact we have had in the cancer community to date,’ she added.

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