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What Does the Haleon Spinoff Mean for GSK Shareholders?

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GSK decided to spinoff its consumer health unit Haleon in an arrangement that gives its shareholders the majority stake in the business. In addition, Pfizer retains a significant stake, while GSK receives a special dividend in the spinoff.

British pharmaceuticals giant GlaxoSmithKline (GB:GSK) (GSK) completed the much-anticipated spinoff and subsequent public listing of its consumer health business Haleon on July 18. The remaining GSK operations will now be focused on prescription medicines and vaccines, according to a CNBC report.

The spinoff of Haleon comes after GSK turned down Unilever’s (UL) offer to acquire the business for £50 billion. GSK rejected the Unilever bid for Haleon on the grounds that it undervalued the business. Haleon debuted at a valuation of £30.5 billion. Haleon hosts GSK’s consumer brands such as Sensodyne toothpaste and painkillers Advil and Panadol.

GSK Shareholders Get Majority Stake in Haleon Spinoff

The majority stake of 54.5% in Haleon went to GSK shareholders. The distribution involved GSK shareholders receiving one Haleon share for every GSK share they own. Pfizer (PFE) got a stake of 32% in Haleon. GSK retained a stake of 13.5% in the business. Haleon also paid a special dividend of £7 billion to GSK shareholders.

Haleon generated about £10 billion in revenue in 2021. It expects revenue growth in the range of 4% to 6% annually in the coming years.

GSK’s Roadmap: 10 Years Without Haleon

GSK’s prescription drugs and vaccines business, which now becomes the central focus after the Haleon spinoff, brought in revenue of £24.5 billion in 2021. The company expects the business to exceed £33 billion in revenue in 2031, according to a Wall Street Journal report.

Wall Street Recommends Hold on GSK Stock

The stock has a Hold consensus rating based on three Buys, five Holds, and one Sell. The average GSK price forecast of 1,850.11p implies 34% upside potential to current levels.

GSK Insiders Are Positive about the Stock

TipRanks’ Insider Trading Activity shows that Insider Confidence Signal is currently Positive on GSK, with corporate insiders purchasing £402,300 shares in the last quarter.

Key Takeaway for Investors

The Haleon spinoff frees GSK to focus more of its time and financial resources on its prescription medicines and vaccine business. The spinoff also unlocks funds for GSK to spend on financing drug development programs, strategic acquisitions, and debt reduction.

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