GSK nets £1bn after sale of stake in Quest

DRUGS maker GlaxoSmithKline has scooped $1.7 billion (£1bn) after selling its stake in American contract research organisation Quest Diagnostics ahead of today's full-year results.

The British firm acquired the shares in 1999 as part of the sale of its clinical laboratories business and has since been reducing its stake.

Deutsche Bank, JP Morgan and Quest itself bought back shares from GSK, which will make about $1.1bn after tax.

Julian Heslop, GSK's chief financial officer, said: "Whilst we have been pleased with our investment in Quest Diagnostics, we have been considering the sale of our remaining position in the company for some time.

"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."

Brian White, an analyst at Shore Capital, said: "Taking the Quest sale in context with GSK's recently-announced 2.2bn legal charge to be taken in the fourth-quarter's profits, the cash generated is certainly timely."

Seymour Pierce's Mike Mitchell added that the legal settlement - which relates to controversial diabetes drug Avandia and an American inquiry into sales practices - will "all but wipe out reported operating profits for the fourth quarter".

The broker had been predicting earnings per share above 105p but, after GSK announced last month that it had set aside the 2.2bn for potential legal settlements, that has fallen to 57p.