What does it do?
This £30.5billion FTSE 100 company may not be a household name, but it brings us such well-known products as Panadol painkillers and Sensodyne toothpaste.
The group was formed in 2018 from the merger of the consumer healthcare arms of the UK pharmaceutical giant GSK and the US titan Pfizer.
In 2022, it was spun off from GSK in the largest European listing for more than a decade and named Haleon.
GSK and Pfizer retained a stake in the new firm.
All GSK shareholders received one share in Haleon for every GSK share they owned.
Why was GSK happy to dispose of the business?
At that time, it was under pressure from the New York activist investor Elliott Investment Management, led by the feared Paul Singer. Emma Walmsley, GSK’s chief executive, has subsequently made her peace with him.
How did the Haleon name come about?
Hale’, suggests health, and ‘leon’, derived from the Greek word for nobility and strength. The aim, presumably, was to suggest that it is the unassailable leader in its areas of operation, which are pain relief, respiratory health, therapeutic oral health and vitamins. Its ‘power’ brands include not only Panadol and Sensodyne, but also Advil, Centrum and Otrivin.
Is debt an issue?
At the time of the split, Haleon took on a lot of borrowings, largely to distribute about £10billion in dividends to GSK and Pfizer. As part of a strategy to become more ‘agile’, it will be switching production of Sensodyne from Berkshire to Slovakia. This move, which involves job losses, is a setback for government plans to boost British manufacturing.
Has the share price been, er, healthy?
Not really. The shares have risen by just 5 per cent since its stock market debut in July 2022. A host of factors – including cost-of-living and a lower incidence of Covid and flu and an insufficient focus on marketing – have been blamed. There have also been mutterings about management culture.
Any other reasons?
GSK has slimmed down its holding to 4.2 per cent. Pfizer has a 24 per cent slice, which it intends to reduce. This overhang is a drag on Haleon’s shares, in the opinion of some. If the previous proprietors severed all ties, this would unlock more value for shareholders.
Analysts at Berenberg are keen on Haleon, citing the prospects for the US launch of Eroxon, a male erectile dysfunction treatment. The broker is targeting a price of 407p, against the current 334p. Berenberg also argues that the shares are trading at a tempting 17 per cent discount to other personal care products groups.
The majority of other analysts are equally upbeat, although the average target price is 364p.
