By Ludwig Burger and Pushkala Aripaka
(Reuters) -GSK on Monday stood by plans to float its consumer healthcare business on the stock market in July, despite market jitters over the Ukraine crisis and after rejecting overtures from Unilever.
“We are extremely confident of our timeline for the de-merger in July and we will be issuing the prospectus in June,” GlaxoSmithKline boss Emma Walmsley said in a media call.
“We’ve been working very hard over the last three years … and navigated through a global pandemic … that’s not to take away from the extreme seriousness of the tragedy in Ukraine,” she added.
The affirmation comes as the pan-European STOXX 600 index fell 1.4% on Monday, led by bank shares, as Western countries imposed tough new sanctions on Russia following its invasion of Ukraine.
CEO Walmsley said GSK had about 400 employees in Ukraine, which the company was trying its best to support “practically and financially”. Russia and Ukraine account for less than 1% of GSK’s sales, she added.
Expectations for the consumer healthcare business’s stock market value are high because GSK late last year rejected a non-binding 50 billion pound ($68 billion) offer from household goods giant Unilever, which abandoned its pursuit in January.
GSK stoked anticipation by dismissing the approach at the time as “fundamentally undervaluing” the business.
The new company, which GSK has named Haleon and which is the world’s largest consumer health business, would have an initial dividend at the lower end of a 30-50% payout rate, GSK said in a statement.
Haleon is expected to have a net debt to adjusted core profit ratio of up to four times following the demerger but debt would be reduced to less than three times by the end of 2024, part of a pledge to maintain a “strong investment-grade balance sheet”, GSK said.
Haleon shares will be listed on the London Stock Exchange, with American depositary receipt listed in the United States.
Under a previously unveiled plan, GSK shareholders will receive stock in the new consumer health group amounting to at least 80% of the 68% stake that GSK currently owns in it. Pfizer owns the remaining 32%.
GSK, which will focus on pharmaceuticals and vaccines, would sell the remaining 20% stake in Haleon “in a disciplined manner” some time after the planned market debut, the group said.
Pfizer has previously signalled it would seek to exit its shareholding in Haleon but GSK said on Monday Pfizer would retain its stake.
That was underscored by GSK saying that Pfizer would appoint two of Haleon’s board members, whereas GSK will relinquish representation.
Other listing plans have not withstood the fallout on global trade and finance from the conflict in Ukraine.
Delayed large public listings include Spanish bank Ibercaja, German artificial limb maker Ottobock and GCP Co-Living REIT.
GSK has previously said that the strong cash flow of Haleon would justify a shift of debt from the parent company to the soon-to-be independent consumer business.
One of the main financial transactions, a special dividend from Haleon to GSK, was on Monday put at more than 7 billion pounds ($9.38 billion) compared with up to 8 billion pounds flagged previously.
GSK said the figure was still within a range agreed with Pfizer, which stands to receive more than 3 billion pounds as part of that windfall.
($1 = 0.7462 pounds)
(Reporting by Ludwig Burger in Frankfurt and Pushkala Aripaka in Bengaluru; Editing by Susan Fenton)
