Haleon Plc (HLN, HLN.L), a prominent British consumer healthcare firm, announced on Friday its plan to acquire an additional 33% equity interest in its Chinese joint venture, Tianjin TSKF Pharmaceutical Co. Ltd. The transaction is valued at RMB 4.47 billion or approximately £0.5 billion.
This acquisition will elevate Haleon's ownership in TSKF from 55% to 88%, enhancing its strategic and operational control over the business. The shares are being purchased from joint venture partners, Tianjin Pharmaceutical Group and Tianjin Pharmaceutical Da Ren Tang Group Corp. Ltd. (DRTG). Specifically, the deal comprises the full 20% equity stake held by TPG and 13% held by DRTG in TSKF.
Pending customary closing conditions, including DRTG shareholder approval and relevant regulatory clearances, the transaction is anticipated to finalize by the end of 2024. It is expected to be accretive to Haleon's earnings per share.
Upon completion of the deal, Haleon will also secure an option to buy, and DRTG will have an option to sell, the remaining 12% stake in TSKF.
TSKF, renowned for manufacturing and distributing brands such as Fenbid, Voltaren, and Bactroban, contributed approximately 40% of Haleon’s revenue from China in fiscal 2023.
Haleon plans to finance the acquisition using a mix of its existing cash reserves and new Renminbi-denominated debt from third-party sources.
Brian McNamara, Chief Executive Officer of Haleon, commented, "China is a pivotal strategic market for Haleon. Over the past three years, we have experienced significant market share growth. Acquiring an additional 33% stake in our joint venture is a crucial and compelling milestone both strategically and commercially."
