GlaxoSmithKline’s Demerger of Haleon Likely to Create Value for Shareholders

GSK’s demerger of its consumer healthcare business, Haleon, will create a new independent firm, which we believe would have an implied market capitalization of just over $40 billion (based on our comparable analysis). We think Haleon will have solid competitive positioning, as evidenced by its well-recognized portfolio, including a leading position in five global categories. We believe the demerger stands to create value for current GSK shareholders, as the remaining GSK company (after the Haleon divestment) should hold faster growth potential, and Haleon should gain a higher valuation multiple (as consumer product firms tend to trade at higher multiples than Big Pharma stocks). In our view, the demerger (slated to take place on July 18) will allow new GSK to focus purely on biopharmaceuticals and vaccines.