GSK to spin off consumer healthcare unit in July

GlaxoSmithKline confirmed on Monday plans to float its consumer healthcare business this summer, just weeks after rebuffing a £50bn approach from Unilever.

Meeting analyst and investors at a capital markets day, the blue chip firm said it would demerge and list the business, to be called Haleon, in July.

Haleon will become the world’s largest standalone consumer healthcare business, with a stable of brands ranging from Sensodyne toothpaste and Panadol, to Centrum vitamins and ChapStick. It is expected to achieve a premium listing in London, with its ADRs listed in the US.

Chief executive Emma Walmsley said the demerger "promises to be the most significant corporate change for GSK in the last 20 years".

She continued: "Haleon has been built through a series of progressive strategic mergers and acquisitions and divestment moves taken in the last few years, creating a focused, global consumer healthcare business with an exceptional portfolio of brands."

Walmsley added that the demerger would also "unlock the potential" of GSK.

Haleon’s organic sales growth is expected to be between 4% and 6% annually, with a "moderate, sustainable expansion" of adjusted operating margin the medium term.

The unit generated sales of £9.5bn in 2021, and achieved 4.4% sales growth CAGR during the 2019 to 2021 period. It is expected to have an initial dividend at the lower end of a 30% to 50% payout rate, GSK said.

Last month, Unilever said it would not increase its offer for the arm beyond £50bn. GSK had rebuffed the approach, arguing it "fundamentally undervalued" the business. But Unilever declined to raise its offer as it did not believe the "fundamental value" of the business was more than £50bn. Some investors and analysts had also voiced concern about Unilever being able to pull off a merger of such magnitude.

The spin off, which is still subject to shareholder approval, will be by way of demerger of at least 80% of GSK’s 68% holding in the business to GSK shareholders. The remaining 32% of the business is owned by US drugs firm Pfizer, which has already said it will seek to exit its shareholding.

GSK will retain up to 20% of its holding in Haleon post separation. Prior to the demerger, GSK will received a dividend of more than $7bn, "creating new flexibility to invest in innovation and growth", the company said.

Shareholders will vote on the proposed demerger in July.