Prime beginning
Spin-off consumer healthcare company Haleon took advantage of its parent pharma companies’ brand recognition, as well as their across-the-pond reach, to come out with its inaugural US$8.75bn bond offering at an auspicious time.
UK-based Haleon issued the seven-part unsecured offering in March to pay a dividend to owners GlaxoSmithKline and Pfizer, ahead of its spin-off as a standalone company. GSK owned 68% of the joint venture that owned Haleon, while Pfizer owned the remaining 32%.
Under its new guise, Haleon will house popular consumer healthcare brands such as Sensodyne, Advil and Centrum.
Bankers were quick to acknowledge how the heft and brand power of the two pharmaceutical giants helped ensure the success of the Yankee offering.
“The beauty of it is that both names have some sort of familiarity,” said Jessica Gough, head of US corporate IG debt capital markets at HSBC.
The deal was made more complicated by the fact that bankers had to navigate a timetable set by their equity capital market counterparts as the new company set a July listing date.
But in a year where timing made all the difference, the fact that Haleon managed to get the offering done in March, before the US Federal Reserve rate-rise regimen could truly take hold, allowed it to land the deal at the tight end of initial thoughts.
That meant Haleon’s prospects as a spin-off were bolstered by the pricing on its debut bond, with all seven tenors coming in with a coupon of 4% or less. Haleon landed at 3.024% for a US$700m two-year, 3.125% for a US$1.75bn three-year, 3.375% for a US$2bn five-year, 3.375% for a US$1bn seven-year, 3.625% for a US$2bn 10-year and 4.0% for a US$1bn 30-year.
After the deal’s launch into US hours, orders quickly piled to a high of US$42bn, the second-largest peak order book for an issuer in 2022, before settling at US$33.8bn.
“This is the type of transaction that would target both US and European investors,” Gough said.
The rich demand available helped bookrunners squeeze pricing, with the 30-year tightening the most after coming in 32bp from initial marketing. Haleon also added a US$300m two-year floater.
The offering also included a sterling and euro component, as part of a globe-trotting financing package, that came a day after the Yankee issuance.
Bookrunners for the US dollar portion were Bank of America, Citigroup, Goldman Sachs, HSBC and Mizuho.
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