Pfizer Inc. (NYSE: PFE) inches up in pre trading session on Wednesday as the firm announced it will begin selling its 32% investment in consumer health company Haleon in order to reduce debt associated with its $43 billion acquisition of Seagen and increase shareholder returns.
Pfizer’s chief financial officer, Dave Denton, told the Financial Times that the corporation will begin selling down the investment within months in a “slow and methodical” manner to avoid undermining Haleon’s market price.
“We love the Haleon business, but it’s not strategic,” Denton explained.
In 2019, GSK and Pfizer formed a joint venture to merge their consumer healthcare operations, which resided under GSK before being split out and listed on the London Stock Exchange. With a value of £30.5 billion, the IPO established the world’s largest pureplay consumer health firm.
Following the transaction, GSK and Pfizer each held 13.5% and 32% of the shares, respectively.
Pfizer’s investment in Haleon, the manufacturer of Sensodyne toothpaste and Advil painkillers, has risen over 14% since its initial public offering, putting Pfizer’s interest in the consumer health sector at little over £10 billion.
However, Haleon’s market capitalisation remains significantly lower than Unilever’s £50 billion takeover offer for the company in January 2022, which was rejected by GSK and Pfizer.
Pfizer’s ambitions were not discussed by Haleon.
Pfizer announced its plan to sell its Haleon interest shortly after reporting a steep drop in first-quarter revenue owing to lower sales of its Covid-19 vaccine.
Pfizer said that it will alter its focus from seeking mergers and acquisitions to replenishing its medicines pipeline to increasing shareholder returns.
Revenues plummeted 29% to $18.2 billion in the three months to the end of March, compared to the same period last year, while Covid vaccine sales fell to $3.06 billion, down from $13.2 billion.
Pfizer’s stock has dropped nearly a quarter this year due to market fears over a sharp reduction in Covid product sales due to the lessening of the epidemic. According to Bloomberg statistics, the drop was so severe that it wiped more than 2 percentage points off the S&P 500 in the first four months of the year, making it the greatest single drag on the benchmark index.
