Wednesday, 2 February 2011 at 15:49, Reuters, London
Expectations that GlaxoSmithKline will restart a share buyback programme in 2011 have risen with the sale of its stake in Quest Diagnostics for some $1.7 billion, or $1.1bn after tax. News of a fresh repurchase scheme could come on Thursday, when the British drugmaker announces its full-year results. Chief Executive Andrew Witty told Reuters in December that the time to resume buybacks was getting closer - but a big legal charge last month led many investors to believe GSK would have to postpone such a move.
The Quest divestment, announced on Wednesday, may give GSK the confidence to commit to repurchases this year after all, some analysts believe. "The proceeds from the Quest sales should now allow the company to restart its repurchase programme," said Jeff Holford, an analyst at Jefferies, who believes a buyback is imminent. In a statement on Wednesday, GSK did not comment specifically on its buyback plans but said the Quest sale was designed to boost returns to shareholders. "We have decided that now is a good time to take advantage of favourable market conditions, thereby releasing funds from one of our non-core assets," said finance chief Julian Heslop. GSK originally acquired the Quest stake as part payment for the sale of its clinical laboratories business in 1999 and has since reduced its holding in stages.
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