Gsk Share Discussion Threads

[mj19] 28/6/2022 16:54

Do you think shareholders will reject it?Basically they have their current shares split in two companies whether like it or not...Plus Haleon carries a bucket of debt

[mj19] 28/6/2022 12:40

Cheers very helpful

[jonjoneil] 28/6/2022 12:36

TM
It is similar to the thinking that all dividends are free

[tradermichael] 28/6/2022 12:33

MJ19 - if that's what you think, best to stay away from the stock market for the summer .... ;0)

[pierre oreilly] 28/6/2022 12:31

Free shares here tomorrow!

[jonjoneil] 28/6/2022 12:28

'Is it worth buying more GSK shares and getting the free Haleon ones?'

or maybe avoid Haleon and the consol altogether by selling GSK just before the split and then buy back your full holding of New GSK as soon as they start trading. (obviously you would lose out if New GSK opens at a premium to the price you sold at)

[geckotheglorious] 28/6/2022 12:20

MJ19
"MJ1928 Jun '22 - 12:13 - 29921 of 29922
I thought for one GSK sure you get one share in haleon"

Yes but the total market cap of the company, as represented by GSK shares currently, will be SPLIT such that if you add New GSK + Haleon, initially, you will get the same valuation as Old GSK.

There is no free lunch.
Haleon is part of the company you already OWN.
So all that is happening is your stake is being split into two entities whereas now it is only one.

[mj19] 28/6/2022 12:14

That sounds good or am I missing something?

[mj19] 28/6/2022 12:13

I thought for one GSK sure you get one share in haleon

[mj19] 28/6/2022 12:02

What the brokers say

Barclays Capital has trawled through 400-odd-page prospectus and distilled its findings into a far less chunky 23-page overview.

Two things struck us from the note. The first, was the indicative valuation range, which, based on a price-to-earnings calculation used to assess companies in the consumer staples sector, comes up well short of the £50bn tentatively tabled by Unilever.

Barclays reckons Haleon shares, once listed on July 18, could be worth anywhere from 249p to 416p, which adds up to an equity valuation of £23bn-£38bn. This is based on valuations ‘multiplesR17; ranging from 15 to 25 times earnings.

The second interesting ‘takeaway̵7; from the note was the bank’s interaction with key shareholders on the issue organic sales growth – a major driver of the company’s valuation.

In the note, Barclays said there was “a degree of scepticism” among investors as to whether Haleon could actually hit the 4%-7% top-line target it has set itself. Indeed, it went on to say there was “significant pushback on our 4.7% medium-term growth forecast”.

Jefferies, the American bank that has a stellar reputation in the healthcare sector, has assessed the demerger from GSK’s investment perspective.

It believes that by spinning out Haleon, whose stock trade is painkillers such as Advil, the UK pharma group has divested itself of a headache (its words not mine).

It has based its ‘buy’ recommendation and £21 a share price target on GSK’s own medium-term growth forecasts – an average 6% increase in sales and 12%-14% compound annual growth in per share earnings.

“New GSK is underappreciated, as the number-two growth profile in EU large-caps,” Jefferies said in its note.

“We accept New GSK pipeline remains a work-in-progress, but catalysts are starting to emerge, and the vaccines franchise just keeps getting better.”

One thing to ponder

Those who hold GSK currently as income play (it yields 4.7% or thereabouts currently) will see a cut in the combined GSK/Haleon pay-out post-demerger.

It is estimated that GSK will distribute around 44p a share in Haleon 11p, giving a 3.2% yield.

[tradermichael] 28/6/2022 11:48

Hardly free, now are they?!!!

[mj19] 28/6/2022 11:38

Guys advice neededIs it worth buying more GSK shares and getting the free Haleon ones?

[keyno] 28/6/2022 10:43

There's a lot of "good news" on the pharma front being released at mo. Timely, just before the split. Hmmmm......

[johnrxx99] 28/6/2022 08:48

Thanks, I concluded that but your opinion is very welcome.

[anhar] 27/6/2022 11:47

anhar, I'm assuming when they say 1 for 1 they mean it.

Yes but what you are misunderstanding is that the 1 for 1 demerger refers to the number of GSK shares held pre-consol, not afterwards.

The order of events is demerger then consol.

[jonjoneil] 27/6/2022 10:48

there are a few on this board who are a little hard of understanding.
To anyone offended by this remark - I didn't mean you!

[johnrxx99] 27/6/2022 10:30

anhar, I'm assuming when they say 1 for 1 they mean it.+

[jonjoneil] 27/6/2022 09:35

GC
My price of £19 for New GSK was not calculated. It is an optimistic guess based on the following:-

Old GSK minus toothpaste(etc) minus debt = New GSK. New GSK plus potential blockbuster drugs plus re-rating = AZN

Note the word 'optimistic'

[anhar] 27/6/2022 09:27

It's not just a possible interpretation, my comment is what they have stated will happen. I can't see any other meaning. In any case there would be no logic in consolidating Haleon, only new GSK

The purpose of the consol is cosmetic, to avoid the price drop that would otherwise occur in new GSK upon demerging Haleon if there was no consol, which they think would look bad. Thus the effect of the consol is to try and maintain a similar share price of new GSK before and after it. A bit of face-saving financial engineerig from which we don't win anything because we will have have fewer shares, though I do welcome the demerger in general.

Consols commonly accompany large cash returns, for the reason above. In this case though instead of cash we're getting Haleon shares with the same effect.

[johnrxx99] 27/6/2022 09:23

Yes, a possible interpretation. We'll see I guess.

[anhar] 27/6/2022 09:16

Thanks - so I'm right, there will be an overall reduction in the number of shares. So, assuming a 70:30 ratio of value (or whatever) if you had 1000 shares at GDP18 (18000 squids) after you will have:-

700GSK @ GDP18 = 12,600
700HAL @ GDP7.71 = 5400
Total 18000

Not quite. It is only the new GSK being consolidated, not Haleon. So on your figures if you held 1,000 old GSK and the consol ratio is 70/100 you will end up with 1,000 Haleon and 700 new GSK.

[johnrxx99] 27/6/2022 08:44

As I'm looking to buy b4 the split, can anyone help with this?

Assuming hep B trial succeeds and it comes onto the market, who will make and sell it? GSK will own the patents but will it have a contractual obligation to hand manufacturing and sales to the NewCo?

[johnrxx99] 27/6/2022 07:18

Thanks - so I'm right, there will be an overall reduction in the number of shares. So, assuming a 70:30 ratio of value (or whatever) if you had 1000 shares at GDP18 (18000 squids) after you will have:-

700GSK @ GDP18 = 12,600
700HAL @ GDP7.71 = 5400
Total 18000