- GSK has recently expressed its intention to demerge its consumer health business, Haleon, and to introduce it to investors by mid-2022.
- In the medium term, Haleon is expected to grow its organic sales in the range of 4%-6% per year.
- Haleon is all set to run as an independent company and provide its shareholders with sustainable and long-term returns.
The UK-based global pharmaceutical company, GlaxoSmithKline (LON: GSK), has recently expressed its intention to demerge its consumer health business, Haleon, and introduce it independently to the investors by mid-2022.
GSK’s Haleon IPO plans
On 28 February, leading British healthcare company GlaxoSmithKline announced its plans to demerge its consumer health business Haleon and its subsequent listing. The demerger and the listing would potentially take place in July this year. Shares of Haleon would be floated on the London Stock Exchange, with ADR listed in the US. As per the current eqution, the majority (68%) stake in Haleon is held by GSK, while the remaining 32% is owned by Pfizer.
Despite the current volatility in the markets due to the ongoing Russia-Ukraine war, the company intends to launch an IPO in July. According to GSK’s CEO, Emma Walmsley, not even 1% of GSK’s total sales are attributed to Russia and Ukraine. Additionally, the market value of Haleon is expected to be high as GSK had rejected Unilever’s (LON: ULVR) £50 billion offer last year.
Haleon is all set to run as an independent company and provide its shareholders with sustainable and long-term returns. The demerger will allow the company to channelise all its attention towards consumer healthcare and follow its goal of delivering better health care services to all in line with its core strategy.
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In the medium term, Haleon is expected to grow its organic sales in the range of 4%-6% per year. Additionally, the adjusted operating margin of Haleon is also expected to grow relatively in the medium run. If the Board of Haleon agrees, the company may offer an initial dividend to the eligible shareholders at the lower end of a 30-50% payout rate.
The growth profile of Haleon looks attractive, and it has solid cash flows, which would help it expand further and generate good returns in the future. After Haleon’s successful demerger from GSK in 2022, its net debt or adjusted EBITDA would fall to less than three times by the end of 2024 from around four times.
GlaxoSmithKline’s share price performance
Brentford-headquartered company GlaxoSmithKline plc, studies, creates and manufactures a range of medicines, consumer healthcare products, as well as vaccines. The company is listed on the London Stock Exchange’s main market since May 1972, and it is a constituent of the FTSE 100 index.
It has performed well during the pandemic phase and has given a return of 23.28% to its shareholders over the last one year as of 4 March. However its value has depreciated in 2022, and its year-to-date return stands at -7.34%.
GlaxoSmithKline plc’s shares were trading at GBX 1,488.80, down by 2.44% at 10:14 AM (GMT) on 4 March 2022. The current market cap of the pharma company stands at £77,579.53 million.
Haleon’s demerger is going to be the biggest corporate change that GSK has gone through in over two decades. The subsequent listing of Haleon would help it expand its operations further and become a leader in the global consumer health business. The listing date, price, and other details haven’t been revealed by GSK yet, hence more details are expected to be unveiled soon and can be referred from the company’s website.