Pfizer PFE plans to sell 630 million ordinary shares of the consumer health company Haleon HLN, which it owns, in an underwritten offering. The sale of 630 million ordinary shares should be worth around $2.5 billion. Additionally, per a previous plan approved by Haleon shareholders, Pfizer will sell some shares worth approximately $400 million (£315 million) directly to Haleon.

Haleon was a consumer health joint venture (JV), an over-the-counter (OTC) medicines business, jointly created by Pfizer and GSK plc. GSK in 2019. GSK owned a controlling stake of 68% in the Consumer Healthcare JV (CHC JV). GSK/Pfizer divested the CHC JV to form the company Haleon in July 2022.

GSK has been regularly selling its stake in Haleon, and as of January 2024, GSK held slightly over 4% of the issued share capital of Haleon. Pfizer held a 32% stake in Haleon, which will now be reduced to 24% following the above-mentioned two transactions. Pfizer had said back in 2022 that it would sell its stake in Haleon in a disciplined manner. The offer price for the underwritten offering is expected to be announced today.

Pfizer’s stock has declined 32.1% in the past year against an increase of 30.5% for the industry. Zacks Investment Research

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Pfizer is going through a tough phase as its top line is suffering due to a steep drop in revenues from its COVID-19 products, the Comirnaty vaccine and Paxlovid oral pill, on lower demand. It acquired cancer drugmaker Seagen for $43 billion in 2023, which probably has left it in need of cash. The sale of Haleon’s stake should provide some support to its balance sheet.

Lately, several large drugmakers have been divesting their Consumer divisions to help focus on their core pharmaceuticals business. In August 2023, J&J JNJ completely separated its Consumer Health business into a newly listed company called Kenvue, which now operates as a separate and fully independent company.

After completion of the exchange offer, J&J now has a 9.5% stake (approximately 180 million shares) in Kenvue’s common stock, which it may monetize in a tax-efficient manner in 2024. With the complete separation of the Consumer Health segment, J&J has now become a two-sector company focused on the Pharmaceutical and MedTech fields.



Zacks Rank

Pfizer currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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