Pfizer to Quit GSK Consumer JV with Cash Windfall
Pfizer is set to start divesting its 32% stake in Haleon, the consumer health joint venture with GSK, when the British pharma completes the company’s spinoff and Haleon begins trading on the London Stock Exchange on July 18.
GSK is shedding the business by means of a demerger, in which it will offer 80% of its 68% interest in the former joint venture to its own shareholders and other investors. Pfizer, which itself owns 32%, is legally a party to the sale.
The demerger is contingent among other thing on GSK shareholders’ approval, the GSK Share Consolidation and the Related Party Transactions (including Pfizer) at a general meeting to be held on Jul. 6. It also must receive all necessary mandatory governmental and regulatory approvals and the final go-ahead of the GSK board.
In a filing with the London exchange, Pfizer said it will pull out of the joint company “in a disciplined manner,” as agreed with its partner. Both companies have pledged to inform each other before selling any Haleon shares.
In an April 2022 filing, Pfizer valued its stake in the joint venture at $15.8 billion, little changed from the $15.7 billion in equity it declared when it formed the consumer drugs business with GSK in 2019.
The UK drugmaker said it plans to offer at least four-fifths of its stake in Haleon to investors and retain a smaller stake as “a short-term financial investment.” It will shed the remainder later, “in timely manner,” to strengthen its balance sheet and support pension funds.
In exiting the consumer drugs market, Pfizer will collect a huge cash windfall, market watchers said, further enhancing the revenues it is already accumulating from blockbuster sales of the Comirnaty-branded Covid-19 vaccine it developed together with German biotech BioNTech.
Analysts have begun speculating what Pfizer might do with the extra cash. In recent months, both it and GSK have demonstrated that they intend to beef up their positions in innovative drugs and vaccines.
In December 2021, analysts for SVB Securities said Pfizer could be sitting on an acquisition war chest of $175 billion, thanks in major part to proceeds of nearly $16 billion from the sale of its Haleon stake.
Recently, the New York-based pharma giant agreed to pay $11.6 billion for the remaining shares of Biohaven Pharmaceuticals it didn’t yet own, along with that company’s migraine drug portfolio. In early 2022, it completed a $6.7 billion deal for Arena Pharmaceuticals.
While preparing the spinoff of Haleon, GSK said this week that it would buy pneumococcal vaccine developer Affinivax for $2.1 billion. In April, the British pharma acquired Sierra Oncology, which specializes in cancer treatment.
Author: Dede Williams, Freelance Journalist
