GSK investor support for spin-off vindicates rejection of Unilever bid, says chief

GlaxoSmithKline’s chief executive said a shareholder vote in favour of spinning off its consumer healthcare business vindicated the UK drugmaker’s decision to turn down a £50bn takeover offer from Unilever for its joint venture with Pfizer.

In a ballot at the company’s general meeting, 99.8 per cent of investors who voted backed two resolutions needed to enable the demerger of Haleon, paving the way for the largest London listing in a decade.

The spin-off will take place on July 18, with each GSK investor receiving one share in Haleon for each share they own in the parent.

Chief executive Emma Walmsley said the new FTSE 20 company would build value over time, benefiting shareholders, patients and the UK. “I think it’s good for the country to have new global British-anchored, listed, headquartered companies that are serving a purpose that matters,” she told the Financial Times.

She said the shareholder vote vindicated the decision to reject Unilever’s bid, which both GSK and Pfizer believed “didn’t recognise the full value and prospects of the business”. 

Jonathan Symonds, GSK’s chair, said the spin-off was an important moment in the company’s 300-year history, creating “two new ambitious growth companies”. He said GSK would focus on immunology, genetics and machine learning and artificial intelligence, while Haleon benefited from a unique portfolio of brands and geographic reach.

Haleon, which owns brands including Sensodyne and Panadol, is the combination of the consumer health businesses of GSK, Pfizer and Novartis. The new company will be led by Brian McNamara, who oversaw the joint venture when it was part of GSK. Haleon’s board will be chaired by former Tesco chief executive Sir Dave Lewis.

Walmsley masterminded the spin-off of the consumer unit that she previously led. She must now steer the new slimmed-down GSK, focusing on filling its pipeline with new drugs and vaccines. Over the past year, she has been under pressure from activist investors including US hedge fund Elliott Management.

GSK’s remaining business will have a dividend of more than £7bn to invest in research and development and potential deals, as well as a stake in Haleon of up to 6 per cent, which it plans to reduce over time. Pfizer plans to sell its 32 per cent stake in a “disciplined manner”. Both are locked up for several months.

GSK turned down Unilever’s £50bn offer for the consumer business late last year, arguing it undervalued the company. With about £10bn of debt allocated to Haleon, analysts at Credit Suisse recently attached an enterprise value of £44.8bn, and an equity value of £33.1bn, to the company. The analysts said a further bid was unlikely, given that Haleon’s size could present antitrust issues.

Christian Donovan, an individual shareholder, criticised the spin-off at the general meeting and urged others to vote against the proposal. He was concerned about the debt being allocated to Haleon and claimed the Unilever bid had been rejected because of “vanity”.