Four years ago, GSK’s CEO Dame Emma Walmsley surprised the City with news of the plan to break up the group into the GSK pharmaceuticals and vaccines business and the over-the-counter consumer health business, the latter subsequently called Haleon. This was to become GSK’s most significant corporate change in decades.
The GSK/Haleon teams had to navigate every aspect of the demerger and flotation, including the financing, with suitable regard to Pfizer as a significant ‘sleeping partner’.
The thinking behind the move was that both companies would be able to operate more successfully and generate more value as separate entities – the product focus and investment requirements of the two businesses were very different. For instance, GSK spent around 15% of revenue on R&D into vaccines and pharmaceuticals, with Haleon spending just 3% on its global portfolio of over-the-counter brand names.
However, it could not have been foreseen that the timetable for the demerger nearing completion would coincide with war in Ukraine, an inflation panic (including cost input inflation), rapidly rising short- and long-term rates, and massive global instability and uncertainty.
The decision was taken to continue with the demerger to the original timetable and despite the challenges of the external environment – the successful demerger and flotation completed on 18 July 2022.
A key challenge for the treasury team was to complete all its tasks in sync with the equity timetable – with equity considerations and timing typically setting the agenda that it had to fit around – with a huge number of tasks to complete, including:
“A unanimous winner, it was astonishing what the teams managed to do in some challenging circumstances. With a clear road map, they knew what they wanted to do, and the journey landed smoothly in a difficult environment. This will become a great corporate finance case study.”