GSK spin-off Haleon begins listing on Europe’s biggest listing in a decade

GSK’s consumer spin-off Haleon, home to brands ranging from Sensodyne toothpaste to Panadol painkillers, has started trading on the London Stock Exchange in Europe’s biggest listing for a decade.

Haleon shares started trading Monday morning at 330p, with a market value of around £31bn.

The split marks GSK’s biggest corporate restructuring in two decades and will allow the pharmaceutical company, which failed to develop its own Covid-19 vaccine during the pandemic, to focus on infectious diseases and vaccines.

Haleon’s IPO is a litmus test to gauge the City of London’s financial strength and appetite for new listings, with the company set to join GSK on the FTSE 100 index of blue chip stocks .

The last stock market listing on a similar scale was mining and commodities company Glencore, which debuted at a market value of £38bn in 2011. This is a boost for the market British stock exchange at a time when Japanese Softbank-owned chip designer Cambridge Arm is expected to opt for New York for its return to public markets, although it may seek a secondary listing in London after lobbying the UK government .

“Today’s listing is a victory for the London Stock Exchange post-Brexit, as the UK stock market has been overly reliant on commodities and financial firms,” ​​said Victoria Scholar, chief investment officer at Interactive. investor. “However, for Haleon, there is no doubt that this is an extremely difficult time to come to market with this year’s equity market volatility leading to a sharp decline in IPO activity ( Initial Public Offering).

“It is also a challenging time for the consumer healthcare sector, as inflation is near double digits in the UK and US. However, consumer staples and personal care healthcare are generally more resilient to recession than other sectors.

Haleon, which has more than 22,000 employees in 170 markets, earned £1.6 billion in 2021, according to its prospectus. The company is led by Brian McNamara, who joined GSK from Swiss pharmaceutical company Novartis in 2015. The newly listed healthcare company will also use the expertise of former Tesco chief executive Sir Dave Lewis, who was appointed president-elect in December of last year.

“This is an important moment for the UK stock market as it has been dominated for several years by oil, mining and financial companies,” said Chris Beckett, head of research at Quilter Cheviot. “But we will now see a big new consumer-focused company in the UK market, giving investors an alternative to the thin picks already available in this sector – primarily Diageo, Unilever, BAT and Reckitt Benckiser.

Basically, this is an attractive area at the moment. Growth prospects are good and Haleon will have strong pricing power and in a relatively unconsolidated market. This presents an opportunity for organic and acquisition-driven growth.

However, analysts have raised concerns about the amount of debt, likely £10bn, the company is taking on as part of its spin-off.

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There is also uncertainty over when GSK and Pfizer will begin selling their remaining stakes in the business, amounting to nearly 14% and 32%, respectively. Neither will be able to begin selling their holdings until November.

Earlier this year GSK rejected several takeover bids from rival Unilever, the latest worth £50billion, arguing it was undervaluing the business and its growth prospects.

Haleon — whose name refers to “hale,” a synonym for wholesome, and “leon,” which contains the Latin for “lion” — owns nine multinational brands, including Voltaren and Advil pain relievers and Centrum supplements.

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