GlaxoSmithKline sale sparks rumour of share buyback programme

Expectations that GlaxoSmithKline will restart a share buyback programme in 2011 have risen with the sale of its stake in Quest Diagnostics for some £1.05bn.
By The Newsroom
Published 2nd Feb 2011, 14:33 BST
Updated 3rd Feb 2011, 11:35 BST

News of a fresh repurchase scheme could come on Thursday, when the drugmaker announces its full-year results.

Chief Executive Andrew Witty said in December that the time to resume buybacks was getting closer, but a big legal charge last month led investors to believe GSK would have to postpone.

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Analysts said the Quest divestment may give GSK the confidence to commit to repurchases this year.

"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, 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 acquired the Quest stake as part payment for the sale of its clinical laboratories business in 1999.

Related topics:Quest