International
In December 2018, GSK reached an agreement with Pfizer to set up a Consumer Healthcare JV, with combined sales of around £9.8bn, and announced its intention to spin it off in 2022. The move would allow GSK to focus on biopharma, including pharmaceuticals and vaccines.
The standalone company would take on 22,000 people across more than 200 locations and 50 countries, as well as 4,000 contracts, all supported by more than 1,500 global and local processes and over 1,300 systems. The GSK leadership team decided that the new company’s systems and processes should broadly replicate GSK’s, to preserve continuity in the short-term and minimal transitional services for the new company at the point of spin-off. The combination of this scale, a large number of interested stakeholders, as well as a tight timeline, drove massive complexity and represented a significant challenge.
In November 2020, GSK engaged PwC to act as its strategic implementation partner for the separation.
PwC leveraged its experience of other large global separations, and brought together a multidisciplinary team to tackle the various requirements and challenges at each stage of the process. The separation was implemented through a series of “waves”, as well as regional and functional phasing, which de-risked the overall execution. PwC’s approach also ensured GSK could control the exact spin-off date, in order to maximise the opportunity from market conditions.
The primary objective was to achieve full separation of the JV from GSK within the timeframe announced, and replicate the relevant operations from GSK within Haleon. The separation process also offered a unique opportunity to plan for strategic transformations at both companies.
PwC forged strategic relationships with GSK and Haleon across the partnership. The international team blended the right skills, capabilities and experience to deliver this huge demerger successfully. PwC worked collaboratively with the client, anticipating and mitigating risks over the 18-month separation timeline. Delivered in the midst of the pandemic, the engagement demanded a wide range of disciplines, including operations, deals, risk and tax, and a coordinated approach to keep teams spanning 50 countries in step and heading toward the same goal.
In line with GSK’s expectations, Haleon successfully listed on the London Stock Exchange in July 2022 at a £30.5bn valuation – the largest listing in Europe in a decade. Minimal transitional service agreements were required.
The demerger released the potential of both GSK and Haleon to each focus on a core purpose. Haleon will “deliver better everyday health with humanity”, while GSK will focus on R&D for vital medicines such as the world’s first malaria vaccine, with both companies continuing to improve patient outcomes and support global consumer health.
Both GSK and Haleon have now begun strategic transformations, driven by their respective core purposes, which wouldn’t have been possible without their successful separation.
For PwC, the engagement has allowed the firm to refine its playbook for delivering separation programmes, which can be applied across multiple deals, in any industry, at a range of scales.
View the PwC profile in the MCA Members Directory.