UNITED KINGDOM – Pfizer plans to sell its 32% stake in Haleon, its consumer health venture with British drugmaker GSK, after the business lists as an independent company in July, GSK has announced.

GSK is spinning off Haleon, which makes Sensodyne toothpaste and Advil painkillers, so it can focus on vaccines and prescription drugs.

Earlier, GSK rejected a 50 billion pound (US$63 billion) offer for Haleon last year, saying it undervalued the firm.

Pfizer has previously indicated it wanted to sell its stake in Haleon but GSK, which owns 68% of the world’s biggest consumer health business, said in February that the US drugmaker would keep its stake after a flotation.

A Pfizer spokesperson said on Wednesday that the U.S. company had always intended to sell its Haleon stake over time.

Haleon stakeholders have committed to a lock-up period until November, so as not to jeopardize the stock of the new independent company, GSK said.

Expectations for the consumer healthcare venture’s market valuation are high after GSK rejected the 50-billion-pound offer from Unilever, which abandoned its pursuit in January.

If GSK secures valuation of 50 billion pounds (US$62.7 billion) or more it would be the largest listing by market capitalization on the London Stock Exchange in at least two decades, excluding joint listings made via the Shanghai London Stock Connect project.

GSK has applied to Britain’s regulator to list Haleon on the London Stock Exchange on July 18 and said it expected to apply to list it on the New York Stock Exchange as well soon.

New board members

GSK also stated in February that once Haleon is listed as a separate company, Pfizer would appoint two members to its new board and the British drugmaker would relinquish its right to representation.

Currently, Brian McNamara, chief executive of GSK consumer healthcare, has been designated as chief executive of Haleon once it has listed while GSK’s Tobias Hestler is the designated chief financial officer.

Haleon’s closest competitors in the non-prescription drugs, vitamins and oral care market include Procter and Gamble, Colgate-Palmolive, Johnson & Johnson, and Bayer.

Before the spinoff, the holding company for Haleon will pay dividends to GSK and Pfizer. GSK said it would receive cash proceeds of more than 7 billion pounds (US$ 8.8 billion) at separation.

After the spinoff, at least 54.5% of Haleon’s total issued ordinary share capital would be held by GSK shareholders and 6% would be held by GSK, the company said.

Following the split, GSK will focus on pharmaceuticals and vaccines and can no longer rely on steady consumer health sales to offset some of the unpredictability of drug development.

Boost to Pfizer’s financial position

The cash inflow will once again boost Pfizer’s financial position on top of the big pile of money it has built from selling COVID-19 products.

The cash could help Pfizer grow its pipeline of innovative drugs and vaccines through dealmaking.

As of April 3, Pfizer’s stake in Haleon was valued at US$15.8 billion, according to a Pfizer quarterly filing in May. When Pfizer formed the franchise with GSK in 2019, its equity was worth US$15.7 billion.

Counting a US$16 billion injection from selling the Haleon shares, SVB Securities analysts in December projected that Pfizer could have US$175 billion in M&A firepower by the end of 2022.

Pfizer has already put some of the cash toward mergers and acquisition. A few weeks ago, Pfizer put down US$11.6 billion to buy Biohaven Pharmaceuticals along with the latter’s CGRP migraine drug portfolio led by Nurtec ODT.

Earlier this year, the Big Pharma company also closed a US$6.7 billion acquisition of Arena Pharmaceuticals, featuring an S1P modulator for inflammatory diseases.

Similar to Pfizer, GSK is leaving consumer health to focus on novel drugs and vaccines, and it’s also been turning to mergers and acquisition to replenish its pipeline.

In the latest development, GSK unveiled a deal to buy pneumococcal vaccine developer Affinivax for US$3.3 billion, targeting none other than Pfizer’s mega blockbuster Prevnar franchise.

It followed a US$1.9 billion deal unveiled in April for Sierra Oncology, which has a close-to-market JAK inhibitor.

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