Today, Haleon plc (LSE/NYSE: HLN) confirms a significant agreement with Pfizer Inc. (NYSE:) to acquire approximately £230 million worth of its own ordinary shares from Pfizer. This transaction is subject to the completion of Pfizer's proposed offering of Haleon shares to institutional investors through an accelerated bookbuild.
The off-market purchase includes two distinct allocations of Haleon's ordinary shares. Approximately £114.6 million represents the remaining portion of the £500 million allocated for share repurchases for 2024, as announced on February 29, 2024. These shares will be canceled, marking the end of Haleon's on-market share buyback program that began on August 1, 2024.
Additionally, Haleon is buying around £115.4 million worth of shares to be held as treasury shares, fulfilling its obligations under existing employee share plans for 2025.
The agreed purchase price per share for Haleon in this off-market transaction will match the price set in Pfizer's bookbuild offering. Further details will be disclosed following Pfizer's announcement of the final results.
Haleon, a prominent player in the consumer health sector with a portfolio including Oral Health, Pain Relief, Respiratory Health, Digestive Health, and Vitamins, Minerals, and Supplements (VMS), boasts well-known brands such as Advil, Sensodyne, and Centrum. The company focuses on trusted science and innovation in product development.
Recent news from Haleon includes the completion of the divestment of its nicotine replacement therapy (NRT) business outside the United States and the acquisition of an additional 33% equity stake in its Chinese joint venture, Tianjin TSKF Pharmaceutical Co. Ltd. The company also launched a dual-tranche bond offering and introduced Eroxon®, the first FDA-cleared over-the-counter gel for erectile dysfunction treatment in the US.
In terms of financial analysis, Haleon's stock price target has been upgraded by Morgan Stanley and BofA Securities, while Goldman Sachs downgraded the stock to "Neutral" and Berenberg initiated coverage with a "Buy" rating.
The recent share repurchase agreement with Pfizer aligns with Haleon's strong financial position, as indicated by InvestingPro metrics. The company's impressive gross profit margin of 62.54% in the last twelve months reflects its ability to generate profit from sales, supporting share buybacks and financial flexibility.
InvestingPro Tips suggest that Haleon is trading near its 52-week high and has shown strong returns over the last three months, with a price total return of 29.88% during that period. The company's moderate debt level indicates the capacity to execute share buybacks without compromising its balance sheet strength.
For investors seeking further insights, InvestingPro offers 5 additional tips for a comprehensive analysis of Haleon's financial health and market position.
Analysis
The agreement between Haleon plc and Pfizer to repurchase shares worth £230 million demonstrates Haleon's confidence in its financial standing and market position. This move allows Haleon to utilize its strong gross profit margin to fund share buybacks and maintain flexibility. The positive momentum in the company's stock price and returns over the past three months indicates investor confidence and market strength. Additionally, Haleon's prudent financial management, operating with a moderate level of debt, ensures a stable balance sheet and the ability to allocate capital effectively. Overall, this agreement reflects a strategic decision by Haleon to enhance shareholder value and capitalize on market opportunities.