Haleon PLC announced Wednesday its plan to sell its nicotine replacement business outside the U.S. to Indian pharmaceutical group Dr. Reddy's Laboratories for up to £500 million ($632 million). This move aims to streamline Haleon's operations.

Haleon To Sell Nicotine Replacement Biz : Details of the Sale

The British consumer healthcare leader confirmed an agreement to divest the nicotine replacement business, which includes brands Nicotinell, Nicabate, Habitrol, and Thrive, to Dr. Reddy's Laboratories SA. Counsel information for the transaction was not immediately available.

Financial Terms

Haleon, owner of well-known brands like Sensodyne toothpaste and Panadol and Advil painkillers, stated that New York-listed Dr. Reddy's will pay £458 million in cash upfront. The remaining £42 million will be payable by March 2026, contingent on the nicotine replacement business achieving certain performance targets.

Haleon To Sell Nicotine Replacement Biz : Strategic Shift

The healthcare company explained that selling the nicotine replacement business, which includes gum, lozenge, and patch products across more than 30 markets, will help "reduce complexity across the business." This sale also enables Haleon to exit the market outside the U.S.

"Whilst this business has great brands, these are not core for us, but I'm sure they will continue to flourish given the focus and capability of Dr. Reddy's," said Brian McNamara, Haleon's chief executive.

Haleon To Sell Nicotine Replacement Biz : Future Plans

Haleon intends to use the proceeds from the sale to bolster its capital holding. The nicotine replacement business reported net revenue of £217 million in 2023.

Regulatory Approvals and Closing Timeline

The deal, pending regulatory approvals, is expected to close by October 2024. However, the companies did not specify which authorities will be involved in the approval process.

Background

In a related move, U.K. pharmaceutical giant GSK sold its remaining 4.2% stake in its spun-off consumer healthcare unit Haleon for £1.25 billion in May.

Haleon To Sell Nicotine Replacement Biz : Conclusion

Haleon's decision to sell its nicotine replacement business highlights its strategy to focus on core areas, ensuring streamlined operations and enhanced capital strength. The partnership with Dr. Reddy's Laboratories is set to drive growth for the nicotine replacement brands, leveraging Dr. Reddy's expertise and focus.