Haleon plc (LSE/NYSE: HLN), a global leader in consumer health, announced today the completion of its divestment of the nicotine replacement therapy (NRT) business outside the United States. The transaction was finalized with Dr. Reddy's Laboratories SA, a wholly owned subsidiary of Dr. Reddy's Laboratories Limited.
The agreement, which was initially disclosed on June 26, 2024, involves a total consideration of up to £500 million. This sum includes an upfront payment of £458 million and additional deferred, performance-based consideration of up to £42 million, which is expected to be paid during 2025 and the first half of 2026. The deal also encompasses proceeds from the transfer of inventory.
Haleon's strategic move to divest its NRT business aligns with its focus on its core consumer health categories, which include Oral Health, Pain Relief, Respiratory Health, Digestive Health and Other, and Vitamins, Minerals and Supplements (VMS). The company is known for its portfolio of long-standing brands such as Advil, Sensodyne, Panadol, Voltaren, Theraflu, Otrivin, Polident, parodontax, and Centrum, which are underpinned by trusted science and innovation.
This divestment marks a significant step in Haleon's efforts to optimize its business portfolio and concentrate on areas where it holds a leading position in consumer health. The company's purpose, as stated, is to deliver better everyday health with humanity.
In other recent news, Haleon made a significant move by deciding to acquire an additional 33% equity stake in its Chinese joint venture, Tianjin TSKF Pharmaceutical Co. Ltd. This acquisition will increase Haleon's ownership to 88%, further strengthening its strategic position in the Chinese market. Haleon also recently launched a dual-tranche bond offering as part of its Euro Medium Term Note program, intending to use the proceeds for general corporate purposes.
Among other recent developments, Haleon has seen its stock price target upgraded by Morgan Stanley and BofA Securities. Both firms have maintained a positive rating for the stock, with Morgan Stanley expecting an acceleration in volume and growth for Haleon. BofA Securities also forecasts robust earnings per share growth for the company.
However, Goldman Sachs downgraded Haleon's stock from "Buy" to "Neutral," while Berenberg initiated coverage with a "Buy" rating. On the product front, Haleon launched Eroxon®, the first FDA-cleared over-the-counter gel for the treatment of erectile dysfunction in the United States. Lastly, Haleon welcomed two new board members, Alan Stewart and Nancy Avila, and disclosed its total number of shares with voting rights to be 9,123,638,944.
InvestingPro Insights
Haleon's recent divestment of its nicotine replacement therapy business outside the U.S. aligns well with its strategy to focus on core consumer health categories. This move is reflected in several key metrics and insights from InvestingPro.
According to InvestingPro data, Haleon boasts impressive gross profit margins, with a gross profit margin of 62.54% for the last twelve months as of Q2 2024. This strong profitability in its core business segments supports the company's decision to streamline its portfolio.
An InvestingPro Tip highlights that Haleon is trading near its 52-week high, with the current price at 97.59% of its 52-week high. This suggests investor confidence in the company's strategic direction and growth potential.
Another relevant InvestingPro Tip indicates that Haleon has shown a strong return over the last three months. Indeed, the data shows a 29.88% price total return over the past three months, reflecting positive market sentiment possibly influenced by strategic moves like this divestment.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 5 more InvestingPro Tips available for Haleon, providing a deeper understanding of the company's financial health and market position.
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