Dive Brief:
- Pfizer plans to sell its shares in a consumer health joint venture with GlaxoSmithKline after the business is spun off into a new standalone corporation called Haleon.
- GSK will put at least 80% of its 68% holding in the joint venture into Haleon, which is set to begin trading on the London Stock Exchange on July 18. Pfizer currently owns the other 32% and will exit the business “in a disciplined manner,” subject to several conditions, Pfizer said Wednesday.
- Both companies will refrain from selling shares in the new venture for some time. Under the agreement, a lock-up will continue through Nov. 10 unless Haleon releases certain financial results earlier.
Dive Insight:
The joint venture, formed in 2019, sells household products such as the pain reliever Advil, Centrum vitamins and Sensodyne toothpaste. In its current form, the business generates annual sales of about 10 billion pounds ($12.6 billion).
For Pfizer, the venture has offered a steady stream of cash, about $600 million in pretax income every year. But the New York-based company, much like GSK, is looking to focus on vaccines and developing new medicines, so it will exit the business “with the objective of maximizing value” for shareholders, Pfizer said Wednesday.
GSK decided to continue with the spinoff despite interest from major consumer goods companies. It rejected three offers from Unilever, including one in late 2021 for 50 billion pounds. Nestle also considered trying to buy the unit, perhaps with a partner such as Reckitt Benckiser Group, according to Bloomberg News.
GSK investors will get one share of Haleon for each share they own in the British drugmaker. After the spinoff, GSK stockholders will own at least 54.5% of Haleon, with GSK itself holding as much as 6% and a set of Scottish limited partnerships set up by GSK in control of 7.5%. The partnerships will provide extra funding for GSK’s pension obligations, the company said.
The joint venture holding company will also pay dividends to GSK and Pfizer before the demerger, adding more than 7 billion pounds to GSK’s coffers.
Haleon will instantly become a standalone world leader in consumer health, with annual revenue growth of 4% to 6%, GSK said. Brian McNamara, who currently leads the consumer health business, will become CEO of Haleon after the spinoff.
