Market boost as GSK floats consumer arm

PHARMACEUTICALS giant GSK will float its £45billion consumer healthcare arm Haleon tomorrow, in what will be the biggest London Stock Exchange listing for a decade.

GSK says floating Haleon, which is home to household brands such as Panadol, Nicorette, Centrum vitamins and Aquafresh, is the biggest shake-up of the business for 20 years. It adds that the deal will result in two focused companies, “each with clear targets for growth and the ability to positively impact the health and lives” of billions of people.

Haleon is 68:32 owned by GSK and its US rival Pfizer. From tomorrow, GSK’S stake will drop to 6 per cent, while groups linked to its pension schemes will own 7.5 per cent.

Institutional shareholders will own 54.5 per cent, and while Pfizer will retain its holding for the moment, it plans to sell it.

Chris Beckett, head of equity research at wealth management group Quilter Cheviot, said that the listing of Haleon was an “important moment” for the UK stock market, as the FTSE has been dominated for a number of years by oil, mining and financial companies.

“We will now see a new, large, consumer-focused business on the UK market, giving investors an alternative to the slim pickings already available in this sector – predominantly Diageo, Unilever, BAT and Reckitt Benckiser,” he said.

Last year, Haleon had a turnover of £9.5billion and made a pre-tax profit of £1.6billion.

For the first quarter of this year, its revenues were £1.6billion and its profits before taxes were £466million.

As a standalone company,

Haleon will have debts of £10billion and Beckett said that this could hamper its dividend prospects: “There are some concerns over the amount of debt the company is taking on as part of the demerger with GSK. This will impact upon the dividend in the short term.”

Hargreaves Lansdown senior investment and markets analyst Susannah Streeter agreed and said that it could take years for holders of GSK and Haleon shares to see dividend payments get back to the levels they were prior to the separation of the two companies.

She said: “With the ‘New GSK’ dividend expected to tick along at a lower level from 2023, and the consumer business likely to be cutting debt at least initially, it could take years for the overall dividend to return to its current level.

“As with any dividend, there are no guarantees.”