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(Alliance News) - Haleon PLC, the consumer healthcare product arm of GSK PLC, will start trading on Monday, becoming effectively by far the biggest new listing in London in 2022, a poor year so far for initial public offerings.
Haleon will go straight into the FTSE 100 index, where GSK also will remain. As a result, the lowest ranked FTSE 100 stock based on closing prices on Monday will be demoted to the FTSE 250 to make room for Haleon, index provider FTSE Russell has said. Currently the FTSE 100 companies with the smallest market capitalisations are, from smallest to largest, Harbour Energy PLC, abrdn PLC and Howden Joinery PLC.
The Haleon separation will take the form of a demerger of at least 80% of GSK's current 68% share of the consumer business to GSK shareholders. The remaining 32% of Consumer Healthcare is held by US peer Pfizer Inc, which will exit its 32% interest in Haleon after the float, though it cannot start doing this until November.
Haleon also will have American Depository Receipts listed in New York.
Haleon will provide consumer healthcare products in five categories: Oral Health, Pain Relief, VMS, Respiratory Health, Digestive Health and Other. Meanwhile, GSK will be a pure biopharmaceutical firm, focused on vaccines and specialty medicines.
GSK will report second-quarter results on July 27, and these will exclude the Consumer Healthcare business from the category of 'continuing operations'.
The listing of Haleon, with gross assets of more than GBP45 billion, will be the largest stock-market listing in Europe in over a decade, noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
"The idea behind the demerger is for value to be unlocked in both businesses, but GSK is parcelling off a considerable quantity of its sizeable debt pile into Haleon, expected to be around GBP10 billion," Streeter said. As Haleon will have a net debt-to-earnings ratio of four times, versus just two times for GSK, dividend payments may suffer while Haleon pays down borrowings, she predicted.
GSK was up 0.9% at 1,695.80 pence on Friday at midday, giving it a market capitalisation of GBP86.23 billion. The stock is up 21% in the past 12 months.
By Tom Waite; thomaslwaite@alliancenews.com
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