Investors in British pharma giant GSK have voted to spin off its consumer brands into a new company, Haleon, kicking off the biggest London stock market listing in a decade.
Shares of Haleon are expected to begin trading on Monday, July 18, after investors at GSK – formerly GlaxoSmithKline – voted to approve the split. The FTSE 100 company won 99.8% of the votes cast at a general meeting on Wednesday at a hotel near London’s Heathrow Airport.
Haleon, whose brand portfolio will include Sensodyne toothpaste and painkillers Advil and Panadol, is expected to seek a valuation of up to £45bn.
The approval paves the way for a listing that will be used to gauge the financial strength of the City of London post-Brexit, with the formation of a company almost certain to join its current owner on the FTSE 100 index of blue-chip stocks .
The last stock market listing on a similar scale was the entry of mining and commodities company Glencore at a market value of £38bn in 2011.
London looks set to lose to New York for the planned return to the public markets of Arm, the Cambridge chip designer owned by Japanese bank Softbank. The UK government pushed for Arm to have a secondary listing in London, fearing it could lose another major UK-based show.
The London Stock Exchange has been described as in “secular decline», with a drop in the number of listed companies from more than 4,400 in the early 1960s to less than 1,200 today.
The Morrison supermarket exited the stock market last year, the biggest in a wave of private equity buyouts triggered when share prices fell during the pandemic.
Haleon will employ 23,000 employees in 100 countries. Its operations generated revenues of £9.5bn and profits of £1.6bn in 2021, according to its share offering prospectus.
Haleon – whose name refers to “hale”, synonymous with wholesome, and “leon”, which contains the Latin for “lion” – has nine multinational brands, including Voltaren painkiller and Centrum supplements, which account for nearly 60% of income. .
Sir Dave Lewis, the former chief executive of Tesco, has been named the company’s non-executive chairman. Brian McNamara, a former Procter & Gamble and Novartis executive, will continue to lead the company, having led it as a division of GSK since 2016.
Bankers, lawyers and advisers will reap up to £117million in transaction costs from the split, according to the prospectus.
GSK board members, including chief executive Emma Walmsley, faced a mixed reception at the meeting. One individual shareholder called for a round of applause for the completion of the split, but others questioned the logic of the deal and whether it was a mistake to turn down a £50bn offer to late last year from Unilever, another FTSE 100 consumer goods company.
Credit Suisse analysts have since given Haleon a stock valuation of £33bn, while other analysts value it at up to £40bn, plus a pile of debt worth over of £10 billion after paying dividends worth £7 billion to GSK and £3 billion to Pfizer.
GSK had argued that Unilever’s bid undervalued the company – although this was before the prospect of higher interest rates hit global equity indices and the price shock of the energy is threatening to cause recessions around the world.
“I think it’s a real disservice to shareholders to have to suffer such a consequence,” one shareholder said.
However, Sir Jonathan Symonds, chairman of GSK, said Haleon had a “very competitive growth profile” and its sales would prove resilient against the backdrop of rising inflation in many economies around the world.
Haleon’s products, which are sold over the counter without a prescription, will provide “a very quick and efficient way for consumers to access medications,” he said.
“We’re balanced here with two very attractive companies with room to grow,” Symonds said, referring to GSK and Haleon.
After the split is complete, GSK shareholders will own 54.5% of Haleon, while GSK will still own around 6% and control an additional 7.5%.
GSK’s pharmaceutical rival Pfizer will initially own almost a third of the company, which was created in 2019 as a joint venture, although the US company will own a minority. Pfizer said it would gradually sell its stake after listing.