GlaxoSmithKline (GSK) - Get Report shares surged to the top of the European market Wednesday after the drugmaker said it would combine its consumer health division with U.S. rival Pfizer Inc.'s (PFE) - Get Report to create a new division with $13 billion in annual sales.

GlaxoSmithKline also said it would split its remaining pharmaceutical business into two separate divisions, one focused on over-the-counter drugs, the other on prescriptions and vaccines, following the joint venture creation with Pfizer. GlaxoSmithKline will also own 68% of the newly-created group and has another £1 billion in divestments planned over the near-term.

"The combination of GSK and Pfizer's consumer healthcare businesses we will create substantial further value for shareholders," said GSK CEO Emma Walmsley. "At the same time, incremental cashflows and visibility of the intended separation will help support GSK's future capital planning and further investment in our pharmaceuticals pipeline."

"With our future intention to separate, the transaction also presents a clear pathway forward for GSK to create a new global Pharmaceuticals/Vaccines company, with an R&D approach focused on science related to the immune system, use of genetics and advanced technologies, and a new world-leading Consumer Healthcare company," she added.

GSK shares were marked 5.635% higher in early London trading, the biggest gain in more than 2 years, and changing hands at £15.29 each. The move reverses all of the declines from the past three months and brings its year-to-date advance to around 16%.

Pfizer said the deal would add $650 million in cost synergies and add to the group's bottom line for the first three years of the formation. The company also said it would deconsolidate its healthcare business from quarterly and annual earnings once the transaction closes next year. 

"We are pleased to announce this new joint venture for Pfizer Consumer Healthcare, delivering on our commitment to complete the strategic review for this business in 2018," said outgoing CEO Ian Read. "Pfizer and GSK have an excellent track record of creating successful collaborations, and we look forward to working together again to unlock the potential of our combined consumer healthcare businesses."

The Pfizer move is the second major corporate deal for Walmsley in as many weeks, after steering the purchase of ovarian cancer drug specialists Tesaro Inc. (TSRO) - Get Report for around $5.1 billion on December 3. 

GlaxoSmithKline said it will pay $75 a share for the Waltham, Mass.-based Tesaro, a 110% premium to the 30-day moving average of its share price, and said the deal will hit its near-term earnings by a "mid to high" single digit percentage, but will start to add to its adjusted bottom line by 2022.

Walmsley cautioned the deal wouldn't add to the pharma giant's bottom line until 2022, but insisted GlaxoSmithKline won't change its shareholder return policies and expects to pay an 80 pence per share dividend for the 2018 financial year - a view she reiterated again today.

"GSK remains committed to its current dividend policy and confirms it continues to expect to pay 80 pence per share in dividends for 2018," the company said. "Recognising the significance of this proposed transaction and the importance of dividends to shareholders, the company is today confirming that it expects to pay dividends of 80 pence per share for 2019."

Pfizer, for its part, approved a 36 cents per share dividend for its last fiscal quarter, a 6% increase from the same period last year which will be paid on March 1 and authorized a new, $10 billion share repurchase plan, adding to an existing program of around $4.9 billion. The first quarter dividend is Pfizer's 321st consecutive shareholder payout by the New York based pharmaceutical group.