GSK Updates Spin-off of Consumer Health Biz To Form HaleonBy
GlaxoSmithKline (GSK) has provided an update of the spin-off of its Consumer Healthcare business to form an independent, publicly traded company, Haleon. GSK expects the spin-off and the listing of Haleon on the London Stock Exchange to occur in mid-July (July 2022). GSK had first announced plans for the spin-off in June 2021.
GKS’s Consumer Healthcare business is now a joint venture between GSK and Pfizer. It was formed from the combination of the legacy GSK consumer healthcare business with the Novartis consumer healthcare business in 2015, and the subsequent combination of that resulting business with Pfizer’s consumer healthcare business in 2019. GSK holds a majority controlling interest in the joint venture of 68% and Pfizer 32%. The business posted revenues of £9.5 billion ($11.9 billion) in FY 2021. Under the planned spin-off, GSK will make available at least 80% of its ownership interest in the business to GSK’s shareholders.
Prior to the separation, GlaxoSmithKline Consumer Healthcare Holdings, the current holding company of the Consumer Healthcare business, will pay dividends to GSK and Pfizer, with GSK expected to receive cash proceeds of more than £7 billion ($8.7 billion). Qualifying GSK shareholders will be entitled to receive one Haleon share for each GSK share held by them and will continue to own their GSK shares unless they sell or transfer them.
Following the demerger and the listing of Haleon on the London Stock Exchange, Pfizer will continue to hold a 32% ownership interest in Haleon although Pfizer says it intends to exit its 32% ownership interest in Haleon in “a disciplined manner, with the objective of maximizing value for Pfizer shareholders.”
GSK and certain related entities will retain, in the aggregate, an approximately 13.6% ownership interest in Haleon following the demerger. In addition, Haleon plans to soon apply to list American Depositary Shares representing Haleon ordinary shares on the New York Stock Exchange. Completion of the demerger and the listings of the London Stock Exchange and the New York Stock Exchange are subject to customary conditions, including GSK shareholder approval.
The new company, Haleon, will operate across five product segments: (1) oral health, which represented 29% of the business’ FY 2021 revenues of £9.5 billion ($11.9 billion); (2) pain relief, 23%; (3) digestive health and other, 20%; (4) vitamins, minerals, and supplements, 16%; and (5) respiratory health, 12%.
The new company would operate a supply chain that combines a network of 24 in-house dedicated consumer healthcare manufacturing globally and approximately 180 third-party contract manufacturing organizations (CMOs), according to Haleon’s prospectus filing.