Galapagos to spin off innovative medicines business

(Reuters) - Amsterdam-listed pharmaceutical firm Galapagos said on Wednesday it was planning to split into two listed entities by mid-2025, creating a new company focused on innovative medicines.

The group, headquartered in the city of Mechelen in Belgium, will provide around 2.45 billion euros ($2.53 billion) of cash for the new entity, to be named at a later date, it said in a press release.

"The proposed separation aims to help investors more easily assess the merits, and future prospects of the two distinct businesses, allowing them to invest in each company based on their own strategy," Galapagos' finance chief Thad Huston said.

The plan is for both companies to be listed on Euronext.

The group's American partner and shareholder Gilead Sciences will hold about 25% of the shares in both Galapagos and the newly created firm following the split, Galapagos said.

The reorganization is expected to lead to the reduction of around 300 positions in Europe, or around 40% of the group's workforce, it added.

After the reorganization, the group expects its normalized annual cash outflow to be between 175 million and 225 million euros, excluding restructuring costs.

Shares in Galapagos rose 10.5% by 0806 GMT, touching their highest price since mid-March last year.

The Galapagos stock has faced a strong devaluation since late 2020, after the Belgian group decided not to pursue the U.S. Food and Drug Administration's approval of its experimental rheumatoid arthritis treatment.

(This story has been corrected to say that Galapagos is a Belgian firm listed in Amsterdam, not Dutch, in paragraphs 1, 2, and 9)

(Reporting by Alban Kacher in Gdansk; editing by Milla Nissi)