Post Mega London Stock Exchange Listing, GSK Spinoff Haleon's Plunge Brings Valuation Concerns To The Fore

After GSK GSK spun off its consumer health division Haleon Plc HLN into a separate entity, shares of the newly listed firm plunged during intraday trade, closing over 6.5% down at GBX 308.4 on the London Stock Exchange on Monday. Haleon continued to slump on Tuesday, losing the key GBX 300 level in early trading.

Haleon’s debut was the biggest listing on the LSE since Glencore’s GLNCY £38 billion listing in 2011, reports The Guardian.  The shares tanked on debut as they entered volatile markets overshadowed by inflation concerns and political turmoil.

GSK stock price closed 2% lower at $40.41 on the NYSE on Monday.

Also Read: GSK Completes Spin Off Of Its Consumer Healthcare Business

Why It Matters: The market value of Haleon at £30.5 billion fell short of what its rival Unilever plc UL had agreed to pay earlier this year, reports Reuters. GSK had reportedly rebuffed the offer of £50 billion made by Unilever this January.

Under the current terms, GSK shareholders received one Haleon Plc share for each GSK share held at 6.00 p.m. U.K. time on Friday.

Spin-off Logic: The company believes the demerger would unlock value and strengthen prospects with compelling performance outlooks and attractive returns. As part of the spinoff, Haleon paid a special dividend of around £7 billion to GSK that would significantly cut the drug-and-vaccine maker’s debt load, giving it more flexibility to invest in its pipeline, The Wall Street Journal reported.

Revenue: The firm generated £1.6 billion in 2021 and had a free cash flow of £1.2 billion according to its prospectus. The firm owns brands including Sensodyne, Parodontax and Polident.