In a move to fulfill its shareholder return commitments, Haleon plc (LSE/NYSE: HLN), a leader in the consumer health industry, has completed an off-market purchase of shares from Pfizer Inc. (NYSE:PFE) The transaction, announced today, involves Haleon acquiring 60,526,315 ordinary shares at a price of £3.80 per share, totaling approximately £230 million.
This strategic purchase includes two distinct segments. Firstly, 30,161,278 shares, valued at roughly £114.6 million, will be canceled. This action concludes Haleon's £500 million share buyback program for 2024, which began on August 1. Secondly, an additional 30,365,037 shares, worth approximately £115.4 million, will be retained as treasury shares to support the company's employee share plans in 2025.
Following the completion of this transaction and Pfizer's concurrent offering to institutional investors, Pfizer's ownership in Haleon is expected to decrease from about 22.6% to 15.0%. Brian McNamara, Haleon's CEO, stated that this purchase aligns with the company's capital allocation strategy and commitment to providing returns to shareholders, supported by a solid investment-grade balance sheet.
The completion of this off-market purchase marks another step in Pfizer's gradual divestment from Haleon since its listing in July 2022. This information is based on a press release statement and is intended for informational purposes only.
In other recent news, Haleon plc has made significant strides in its business operations. The company has finalized a buyback agreement with Pfizer Inc. to purchase approximately £230 million worth of its own shares. This includes £114.6 million dedicated to share repurchases and approximately £115.4 million worth of shares to be held as treasury shares to fulfill the company's obligations under its existing employee share plans for 2025.
Haleon also completed the divestment of its nicotine replacement therapy business outside the United States to Dr. Reddy's Laboratories SA, a transaction involving up to £500 million. Moreover, the company decided to acquire an additional 33% equity stake in its Chinese joint venture, Tianjin TSKF Pharmaceutical Co. Ltd, increasing its ownership to 88%.
In terms of financial maneuvers, Haleon launched a dual-tranche bond offering as part of its Euro Medium Term Note program. Morgan Stanley and BofA Securities have upgraded Haleon's stock price target, while Goldman Sachs downgraded Haleon's stock from "Buy" to "Neutral," and Berenberg initiated coverage with a "Buy" rating.
Finally, Haleon launched Eroxon®, the first FDA-cleared over-the-counter gel for the treatment of erectile dysfunction in the United States, and welcomed two new board members, Alan Stewart and Nancy Avila. These are recent developments in Haleon's business operations.
InvestingPro Insights
Recent InvestingPro data provides additional context to Haleon's strategic move. With a market capitalization of $48.03 billion, Haleon demonstrates its significant presence in the consumer health industry. The company's impressive gross profit margin of 62.54% for the last twelve months as of Q2 2024 underscores its operational efficiency, aligning with one of the InvestingPro Tips highlighting "impressive gross profit margins."
Haleon's stock has shown strong performance recently, with a 27.85% price total return over the past three months. This aligns with another InvestingPro Tip noting a "strong return over the last three months." The company's dividend yield of 1.0% and substantial dividend growth of 82.67% in the last twelve months further illustrate its commitment to shareholder returns, as evidenced by the recent share buyback from Pfizer.
InvestingPro offers 8 additional tips for Haleon, providing investors with a more comprehensive analysis of the company's financial health and market position. These insights can be particularly valuable in understanding the implications of Haleon's recent strategic moves and their potential impact on future performance.
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