Pfizer is selling a stake of its former joint venture in consumer healthcare, Haleon. The sale will be worth approximately £2.3 billion.
The American drug company intends to reduce its remaining holdings in the manufacturer of Sensodyne tooth paste and Panadol painkillers, from 32 percent to approximately 24 percent.
Pfizer is selling down in two stages. In a global offering, they plan to sell 630 million shares. The price will be announced Tuesday, following the build-up of the book. The shares are valued at about £2 billion based on Haleon’s most recent share price, but it is expected that the sale will be discounted.
Pfizer has agreed to sell Haleon shares worth approximately £315million at the same price that the global offer.
After the update, shares in Haleon fell by 7 1/4p or 2.3 percent to 315p at the London Stock Exchange. This is below the level of 330p where the company was valued in July 2022 when it separated from GSK (Pfizer’s ex-joint venture partner) in what was London’s largest listing in the past decade.
Haleon shares have fluctuated ever since, with the weight of GSK’s and Pfizer’s large stakes, plus thousands of US lawsuits claiming that Zantac was a blockbuster GSK heartburn drug which caused cancer.
GSK reduced its holdings to 4.2 percent in three stages. Pfizer had previously stated that it would reduce its positions “slowly and methodically”.
Haleon CEO Brian McNamara reiterated, last month, at the time Haleon released its full-year results that it was looking to buy back shares from Pfizer.
Haleon announced then plans to launch a a £500 million share purchase in this year. McNamara (57) had stated that the buyback would take place regardless of what Pfizer or GSK intended to do with their stocks.
Haleon, since the separation, has cut costs. It aims to save £300 million annually, which it will reinvest in automation, clinical R&D and unwanted brands. For example, Lamisil is an antifungal medication that was sold to Karo Healthcare for £235 millions last year, and ChapStick, a ChapStick brand, went to Suave Brands in January, a company in Yellow Wood Partners’ portfolio , for a deal of more than 500 million
Haleon expects organic revenue growth between 4 and 6 percent this year and in the medium-term. It also plans to reduce its debt ratio to 2.5 times, and increase the dividend in the future “at least to the adjusted earnings”.
Citigroup, Morgan Stanley JP Morgan, Barclays and UBS all work on Pfizer’s saledown.
Bernstein analysts noted that after Pfizer sold its shares, the overhang on Haleon stock would have decreased from 45 percent at the time of separation to 28.2 percent.
The Pfizer overhang was the primary concern that investors had in deciding whether or not to invest in Haleon. If the book-building is smooth, the announcement today should dispel many of the fears about the overhang as investors begin to see light at the other end of the dark tunnel.