GSK's spin-off Haleon to be listed on LSE: Should you hold stock?

Pharma giant GSK plc (LON: GSK), which was previously known as GlaxoSmithKline plc, had in February announced that it would demerge its consumer healthcare business into a separate arm called Haleon. The new company is expected to be listed on the London Stock Exchange on 18 July, according to FTSE Russel.

Haleon will offer consumer healthcare products in categories including - Oral Health, Respiratory Health, Digestive Health, Pain Relief, VMS, and others. Its portfolio will include brands like Sensodyne, Centrum, Voltaren, and Panadol, among others. The brands are expected to generate about £10 billion in annual revenue through sales.

The demerger will also make GSK a pure biopharmaceutical company, with a focus on vaccines and speciality drugs.

© 2022 Kalkine Media®

Details of the demerger

The consumer healthcare business of GSK is a joint venture between it and the US pharma giant Pfizer, with GSK holding a majority stake of 68% and Pfizer holding the remaining 32%. Haleon will be formed by the demerger of at least 80% of GSK's 68% holdings to GSK shareholders. Following the demerger, Pfizer will exit the 32% interest in Haleon after the IPO.

Shareholders of GSK will receive Haleon shares on a one-for-one basis.

Details of Haleon's listing

Haleon is expected to be a constituent of the same indices as GSK, including the blue-chip FTSE 100. At the market close on July 18, the indices with a fixed number of listed stocks will be ranked according to the closing prices, and the stock occupying the lowest position will be removed after a two-day notice.

As per FTSE Russel, GSK will undertake a share consolidation to maintain consistent pricing after the completion of the demerger.

GSK's Q1 2022 performance

In the first quarter of 2022, GSK posted strong growth across both its biopharma and consumer healthcare divisions. It reported a total turnover of £9.7 billion in Q1 2022, including £7.1 billion from biopharma and £2.6 billion from consumer healthcare. The total operating profit climbed to £2.8 billion during the period.

For its full-year guidance, the company expects to deliver a growth of 5% - 7% in sales. This guidance excludes the revenues generated from COVID-19 solutions.

Share price performance of GSK

The London-headquartered company holds a market capitalisation of £87,374.46 million at present. In the past one year, it has given the shareholders a return of 19.90%. The year-to-date return stands at 5.71%.

Shares of the company were 1.34% down at GBX 1,695.60 as of 8:47 pm GMT+1 on 16 June 2022.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.