GSK shareholder-friendly policy shift could hurt credit profile, Fitch says

Fitch Ratings has warned that GlaxoSmithKline's (GSK) proposal to float part of its HIV drugs unit could hurt the group's credit profile.

The proposed move, which is seen as the first step of a potential shift towards more "shareholder-friendly financial policies" coupled with the drugmaker's weak share price performance could see GSK using the proceeds for "shareholder-friendly purposes", rather than reinvesting them or paying down debt, Fitch said in a note on Monday.

Were GSK to float part of its stake in HIV drg busiess ViiV, the drugmaker would move towards a holding company model, particularly after completing the deal with Novartis, which saw the two groups' consumer healthcare units combined together.

The rating agency added that GSK's decision to maintain its 2015 dividend at the same level of 2014 was a sign the firm was under pressure from shareholders to keep up pay-outs, despite a decline in underlying performance.

"We expected the Novartis deal to be ratings neutral and to have little impact on GSK's financial ratios, given that a large portion of the proceeds will be passed through to shareholders via extraordinary share buybacks," Fitch said.

"We do expect some margin benefit in the long term from cost savings. The consumer health deal also includes a put clause for Novartis giving it the ability to sell its minority stake to GSK at a future date, which may also impact the financial profile of the group."

GSK shares were down 0.88% to 1,403.00p at 15:17 on Monday.