GSK spin-off Haleon slips 6% on market debut

GlaxoSmithKline spin-off Haleon slipped on its London trading debut as market turmoil and inflation concerns weighed on the consumer goods giant.

The maker of Panadol painkillers and Sensodyne toothpaste opened at 330 pence on Monday in what was the biggest European stock-market listing in a decade, valuing the business at about £30 billion (€36 billion). The stock traded as high as 337.40 early in the day, before giving up the gains and closing 6.6 per cent lower.

The split is part of a shake-up aimed at strengthening the prospects of both companies following pressure from activist investor Elliott Investment Management. Prior to the spin-off, Unilever had made a £50 billion bid for the business that failed in January. Nestlé is also said to have explored buying the unit.

While Haleon was expected to have an equity value of about £33 billion, according to analysts at Credit Suisse Group, some investors will likely focus on the takeover interest in recent months.

“Investors might be wondering why GSK didn’t accept the much higher bid from Unilever, said Danni Hewson, financial analyst at AJ Bell Plc. “While Haleon owns some well-known brands including Sensodyne and Advil, that may not be enough to entice a line of buyers for the stock.”

The company, whose sprawling portfolio of brands also includes the painkiller Advil, instantly ranks as one of the UK’s biggest listed firms. GSK, which has transferred a chunk of its sizeable debt pile into the unit, will focus on prescription drugs and vaccines.

No shares are offered to the market in a spin-off, with the unit’s stock handed to existing shareholders upon listing. This type of deal avoids weeks of exposure to market swings that come with an IPO, making it much easier to execute in volatile times. – Bloomberg

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