Haleon’s Rating Reconfirmed After Changes in Pfizer's Stake

October 01, 2024 04:35 AM PDT | By Team Kalkine Media

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Haleon’s Rating Reconfirmed After Changes in Pfizer's Stake — Image source: Shutterstock

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Highlights

Pfizer Inc. has reduced its stake in Haleon PLC, leading to a significant share repurchase.
UBS has reaffirmed its positive rating on Haleon following this development.
Haleon plans to cancel half of the repurchased shares as part of its strategic share repurchase program.

UBS has reaffirmed a positive outlook on Haleon PLC { NYSE:HLN} following the recent announcement regarding the reduction of its stake by former parent company Pfizer Inc. (NYSE, ETR). Haleon, which encompasses the consumer divisions previously held by Pfizer and GSK PLC (LSE, NYSE), has entered into an off-market agreement to repurchase approximately £230 million worth of its own shares. This decision comes as Pfizer implements a substantial reduction in its ownership, cutting its stake by approximately £2.1 billion.

As a result of this transaction, Pfizer will retain a 16.2% ownership in Haleon. The share repurchase is part of a broader initiative that aims to strengthen Haleon’s market position and optimize its capital structure. UBS analysts have pointed out that half of the shares acquired through this repurchase will be cancelled, aligning with Haleon’s £500 million share repurchase program. This action is designed to enhance shareholder value and reflects the company’s commitment to managing its equity effectively.

The remaining half of the repurchased shares will be held in treasury, designated for fulfilling obligations related to existing employee share plans scheduled for 2025. This strategic move not only addresses employee compensation but also serves to reinforce Haleon’s long-term commitment to its workforce.

Overall, the recent developments surrounding Haleon PLC underscore the company’s proactive approach to capital management and strategic growth. The backing from UBS further highlights the confidence in Haleon’s operational capabilities and market positioning in the consumer health sector, particularly with brands such as Sensodyne and Panadol under its portfolio.

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