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Consumer healthcare company Haleon (NYSE:HLN) announced an agreement on Wednesday to sell its nicotine replacement therapy (NRT) business outside the U.S. to a subsidiary of the Indian drugmaker Dr. Reddy’s Laboratories (NYSE:RDY).
Per the terms, Dr. Reddy’s Laboratories SA, a unit of Dr. Reddy’s (RDY), will buy Haleon’s (HLN) overseas NRT portfolio in a transaction expected to be completed in early Q4 2024.
In return, the company will receive £500M ($633M) from Dr. Reddy’s (RDY), with payments structured as £458 in upfront cash and up to £42M in performance-based payments payable during 2025 and H1 2026.
Payments for inventory sales will also be received over the period. The consumer care spinoff of GSK (GSK) said it would use net proceeds based on capital allocation requirements, including those aimed at reducing debt.
Haleon’s (HLN) NRT products, available in gum, lozenge, and patch forms across more than 30 markets, generated £217M in net revenue for the company in 2023.
Assuming the transaction goes ahead in Q4, the company expects its FY 2024 net revenue and adjusted operating profit to dilute by ~0.5% and ~1%, respectively.