GSK still plans to list its consumer arm in July despite market volatility

A GlaxoSmithKline (GSK) logo is seen at the GSK research center in Stevenage, Britain, November 26, 2019. REUTERS/Peter Nicholls

Feb 28 (Reuters) – GSK (GSK.L) on Monday kept plans to list its consumer health care business in July, despite market jitters over the Ukraine crisis and after rejecting proposals for Unilever (ULVR.L).

“We are very confident in our timeline for the spin-off in July and will issue the prospectus in June,” GlaxoSmithKline chief Emma Walmsley said in a media call.

“We have been working very hard for the last three years…and we are navigating through a global pandemic…that does not detract from the extreme gravity of the tragedy in Ukraine,” he added.

The claim comes as the pan-European STOXX 600 Index (.STOXX) fell 1.4% on Monday, led by bank stocks, as Western countries imposed tough new sanctions on Russia following its invasion of Ukraine.

CEO Walmsley said GSK had around 400 employees in Ukraine, whom the company was doing everything it could to support “practically and financially”. Russia and Ukraine account for less than 1% of GSK’s sales, he added.

Expectations for the market value of the consumer health care business are high because GSK rejected a non-binding 50 billion pound ($68 billion) offer from home goods giant Unilever late last year. who gave up his search in January.

GSK fueled anticipation by dismissing the approach at the time as “basically undervaluing” the business.

The new company, which GSK has called Haleon and which is the world’s largest consumer health company, would have an initial dividend at the low end of a 30-50% payout rate, GSK said in a statement.

Haleon is expected to have a net debt to adjusted basic income ratio of up to four times after the spin-off, but the debt would be reduced to less than three times by the end of 2024, as part of a promise to maintain a “strong balance of investment grade. sheet,” GSK said.

Haleon shares will be listed on the London Stock Exchange, with US Depositary Receipt listed in the United States.

Under a previously unveiled plan, GSK shareholders will receive shares in the new consumer health group for at least 80% of the 68% stake GSK currently owns. Pfizer (PFE.N) owns the remaining 32%.

GSK, which will focus on pharmaceuticals and vaccines, would sell the remaining 20% ​​of Haleon “in a disciplined manner” some time after the expected market debut, the group said.

Pfizer previously said it would seek to exit its shareholding in Haleon, but GSK said on Monday that Pfizer would retain its stake.

That was underlined by GSK by saying that Pfizer would appoint two of Haleon’s board members, while GSK would give up its representation.

Other listing plans have not withstood the fallout on world trade and finance from the conflict in Ukraine.

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GSK has previously said that Haleon’s strong cash flow would justify a shift from parent company debt to the soon-to-be independent consumer business.

One of the major financial transactions, a special dividend from Haleon to GSK, was pegged on Monday at more than 7 billion pounds ($9.38 billion) compared with 8 billion pounds previously noted.

GSK said the figure was still within a range agreed with Pfizer, which will receive more than 3 billion pounds as part of that windfall.

($1 = 0.7462 pounds)

Information from Ludwig Burger in Frankfurt and Pushkala Aripaka in Bangalore; Edited by Susan Fenton

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