Pfizer (NYSE:PFE) has disclosed its intention to divest 630 million ordinary shares of the consumer health company Haleon (HLN) through an underwritten offering, marking a reduction in its ownership from 32% to 24%. This divestment, valued at approximately $2.5 billion, will be complemented by the direct sale of shares worth around $400 million (£315 million) to Haleon, as previously approved by Haleon shareholders.
Established as a consumer health joint venture (JV) in 2019 between Pfizer and GSK plc. (NYSE:GSK), Haleon emerged as an independent entity following the divestiture of the Consumer Healthcare JV (CHC JV) in July 2022. Initially, GSK held a controlling stake of 68% in the CHC JV, and subsequently divested its interests in Haleon, retaining slightly over 4% of the issued share capital as of January 2024.
Pfizer’s decision to reduce its stake in Haleon follows a strategic plan outlined in 2022, aiming for disciplined divestment. The offer price for the underwritten offering is anticipated to be revealed imminently.
Amidst Pfizer’s stock decline of 32.1% over the past year, contrasting with a 30.5% industry increase, the company is facing challenges, notably a decline in revenues from its COVID-19 products, including the Comirnaty vaccine and Paxlovid oral pill, due to reduced demand. Additionally, Pfizer’s acquisition of cancer drugmaker Seagen for $43 billion in 2023 may have strained its cash reserves, making the sale of Haleon shares a strategic move to bolster its balance sheet.
The trend of large drugmakers divesting their Consumer divisions to streamline focus on core pharmaceuticals is apparent. For instance, in August 2023, J&J (JNJ) completely spun off its Consumer Health business into a standalone entity named Kenvue. With this separation, J&J now concentrates solely on its Pharmaceutical and MedTech sectors.
Following the exchange offer, J&J retains a 9.5% stake in Kenvue’s common stock, approximately 180 million shares, which it may potentially monetize in a tax-efficient manner in 2024, solidifying its transition into a two-sector company.
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