Drugmaker GSK sells €1bn stake in former consumer health unit Haleon

Drug group GlaxoSmithKline (GSK) has raised £886 million (€1.02 billion) selling shares in Haleon, the consumer-health business it spun off last year.

The British drug company sold 270 million shares at a price of 328 pence, according to a regulatory announcement on Friday. The price reflects a discount to Haleon’s closing price of 336.25 pence on Thursday. Accelerated offerings are typically priced at a discount to entice shareholders to buy into the deal. Haleon shares have risen about 9 per cent since it started trading in July 2022.

The sale represents about a quarter of GSK’s remaining stake in Haleon, the maker of Aquafresh toothpaste and Panadol, leaving the group with a 7.4 per cent position.

Haleon was originally formed from a combination of the consumer health units of GSK and Pfizer.

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GSK decided to separate Haleon so it could better focus on its pharma and vaccines business. Headed by chief executive Emma Walmsley, GSK is trying to strengthen its drug pipeline, with recent success on a vaccine against RSV, a common virus that can be deadly.

The spin-off aimed at strengthening the prospects of both GSK and Haleon follows pressure from activist investor Elliott Investment Management.

Since the spin-off, GSK has said it intended to treat its stake in Haleon like a financial investment, using proceeds raised to strengthen its balance sheet and help support its aim to improve its drug pipeline.

The stake sale comes less than six months after GSK offloaded about £804 million worth of Haleon stock. Pfizer has also indicated it will gradually sell down its stake in Haleon as part of its move to focus on pharma innovations.

“Investors would likely prefer a bigger placement than this 2.9 per cent by GSK,” said Bruno Monteyne, an analyst at Bernstein, adding there was still a large nearly 40 per cent overhang on Haleon stock.

“If a decent-sized placement of about 10 per cent was done (ie, Pfizer starting to sell), then investors can properly judge the appetite for this stock and start seeing an end to this tunnel.”

Bank of America and Citigroup are global co-ordinators on the offering. The banks gathered demand in excess of the offering size within minutes of putting the block on the market, according to terms seen by Bloomberg. – Bloomberg