Haleon PLC on Thursday it has agreed to sell the ChapStick lip balm brand to Suave Brands Co for around $430 million in cash.
The Surrey, England-based consumer healthcare company said it will also receive a passive minority interest in Suave Brands, which is a portfolio company of Yellow Wood Partners.
At the time of entering into the binding agreement, Haleon said this minority interest was valued at approximately $80 million.
Haleon said cash proceeds from the sale will be used to pay down debt, which it said ‘underpin[s] our confidence to de-lever to net debt [against] adjusted [earnings before interest, tax, depreciation and amortisation] of below [three times] during 2024.’
The sale is expected to close in the second quarter of 2024, Haleon said.
‘Today’s announcement is consistent with Haleon being proactive in managing our portfolio, and being rigorous and disciplined where there are opportunities for divestment,’ said Haleon Chief Executive Officer Brian McNamara.
‘While ChapStick is a great brand, much loved by consumers around the world, it is not a core focus for Haleon Selling the brand allows us to simplify our business and pay down debt more quickly. We’re confident the brand will continue to thrive under its new ownership.’
Haleon said further detail on the transaction will be provided within its annual results announcement on February 29.
Shares in Haleon were up 0.3% to 314.25 pence each shortly after the London open. Its market capitalisation stands at £29.02 billion.
Haleon was spun-off from London-based pharmaceutical firm GSK via a demerger and listing in July 2022, in which GSK initially retained a 13% stake in Haleon. After disposals in May and October last year, this was reduced to 7.4%.
On Wednesday last week, GSK sold 300 million shares in Haleon, reducing its remaining stake in the consumer healthcare products spin-off to just 4.2%.
GSK said it sold the Haleon shares for 326 pence each, raising about £978 million gross.
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