Pfizer to Sell Haleon Stake After GSK Spin-off

The latest news shows that GlaxoSmithKline will complete its spin-off in July into two companies, a new GlaxoSmithKline company focused on the pharmaceutical business, and Haleon, an independent consumer health business. However, GlaxoSmithKline's partner Pfizer has said recently that it intends to sell its Haleon shares after the company's spin-off.

The consumer health business has always been a joint venture between GlaxoSmithKline and Pfizer. GSK was one of the bidders to buy Pfizer's consumer health business before the two companies formed a consumer health partnership. However, the deal was rejected in 2018. A few days later, GlaxoSmithKline bolstered its own consumer health business by acquiring a $13 billion stake in Novartis. That same year, GlaxoSmithKline and Pfizer entered into a partnership to combine the two companies' consumer health businesses into a joint venture.

Currently, GlaxoSmithKline owns 68% of Haleon and Pfizer holds 32%. In 2020, the two companies created a business value of approximately $14 billion, and the new combined company, Haleon, has a rich pipeline of product lines, including Advil, Tums, Sensodyne toothpaste, Excedrin and Nicorette chewing gum.

Pfizer now intends to sell its 32% stake in the company. As for the reasons for the sale, in a brief announcement released this week, Pfizer said the sale is consistent with the company's development goal of "transforming into a more focused, science-based global leader in innovative medicines and vaccines." As of now, the company has not valued its stake. But Pfizer said it would seek to sell its Haleon stake in the most beneficial way to create the most value for the company's shareholders.

Although Pfizer intends to sell its stake in Haleon after Haleon is officially spun off from GSK, Pfizer will continue to maintain close ties with GSK at the board level. Former Pfizer Group President and Chief Commercial Officer John Young and Pfizer Senior Vice President and Deputy General Counsel Bryan Supran will serve on Haleon's board of directors, according to the news.

In December, analysts at SVB Securities estimated that Pfizer would raise $16 billion from the sale of Haleon stock and could have $175 billion in M&A firepower by the end of 2022. At present, Pfizer has used some of its cash for mergers and acquisitions. Just a few weeks ago, Pfizer paid $11.6 billion for Biohaven Pharmaceuticals and the latter's CGRP migraine drug portfolio led by Nurtec ODT. (For details, please click "Phase III SCA Trial Failed After Biohaven was Acquired by Pfizer for $11.6 Billion")

GlaxoSmithKline is optimistic about the prospects of the split company and is expected to continue to hold related shares in Haleon. Last year, GlaxoSmithKline CEO Emma Walmsley predicted that the new GlaxoSmithKline pharmaceutical business would generate annual sales of about $46 billion by 2031. Walmsley also predicts that the company's operating profit will continue to grow by more than 10% over the next five years.

Haleon's headquarters will be in Weybridge, UK. After the split, GSK said Haleon is expected to list on the London Stock Exchange on July 18 and will apply to list American depositary shares on the New York Stock Exchange.