Haleon, GlaxoSmithKline’s (GSK) former consumer health division, will list on the London market today as a standalone entity.
It is a sign of changing tides on the London Stock Exchange, which for years has heavily relied on oil, mining and financial firms.
The new FTSE healthcare heavyweight, which awaits a response on its application to the New York Stock Exchange, is expected to be valued at up to £45bn once it starts trading, however, the shadow of its £10bn worth of debt looms.
The split was green lit just weeks ago, although was initially proposed more than a year ago.
Haleon, which hosts former GSK products Sensodyne, Panadol pain relief, and Centrum multivitamins, will be headed by Brian McNamara, who joined GSK from Swiss pharma giant Novartis in 2015. The newly listed health firm will also use the expertise of former Tesco boss Sir Dave Lewis, who was appointed chairman designate in December last year, as it wrestles with 40-year high inflation.
Unlike a raft of other firms which have put their float plans on hold until the market seems more favourable, McNamara has been quick to dismiss suggestions that Haleon has picked a turbulent time to list, according to a profile by The Times.
“We’re certainly not naive to the fact that we’re in unprecedented times,” he said, adding that “We’re in health categories that matter.”
While rising prices often spooks investors, McNamara noted there had been “very little trade down” on its products during the 2008 financial crisis.
Head of equity research at Quilter Cheviot, Chris Beckett,suggested that even if climbing prices are a concern – investors will be glad to have the opportunity to invest in the consumer products giant, nonetheless.
“This is an important moment for the UK stock market as it has been dominated for a number of years oil, mining and financial companies,” he said. “But we will now see a new, large, consumer focused business on the UK market, giving investors an alternative to the slim pickings already available in this sector – predominantly Diageo, Unilever, BAT and Reckitt Benckiser.
“There are some concerns over the amount of debt the company is taking on as part of the demerger with GSK. This high gearing will impact upon the dividend in the short-term, but hopefully over time these concerns ease.”
Analysts at broker Jefferies said the figure was ‘notably high’ by stock market standards. However, Mazars partner Nigel Layton told City A.M. that despite market turbulence, investors are unlikely to be too risk averse in betting on Haleon, as it owns such popular household brands.
The demerger – the most significant corporate change at GSK for the last two decades – will leave GSK with “less distractions” to focus efforts and capital into infectious diseases and vaccines, after it failed to bring its Covid-19 jab to the market.