By Dhirendra Tripathi
Investing.com – GlaxoSmithKline (NYSE:GSK) shares rose more than 4% in Wednesday’s premarket session on the company’s plans to spin off its consumer healthcare business into a separate company.
Calling itself "New GSK" in a note, the company said it will receive approximately $11.2 billion in dividends from the spin off.
New GSK will prioritize R&D and commercial investment in vaccines and specialty medicines as thrust areas.
The parent company will adopt a progressive dividend policy targeting a pay-out ratio of 40% to 60%.
New GSK will retain up to 20% of GSK’s holding in the new consumer healthcare company as a short-term financial investment, which it intends to monetize later.
New GSK expects to deliver sales growth and adjusted operating profit growth of more than 5% and more than 10%, respectively, over 5 years.
The shares of the new company will be listed in London and its ADRs in the U.S.