Dr. Reddy'S Laboratories S.A. has entered into an agreement to acquire Northstar Switzerland SARL from Haleon plc (LSE:HLN) for £500 million on June 26, 2024. Under the terms of agreement, Dr. Reddy?s Laboratories SA will pay an upfront cash consideration of £458 million and additional performance-based contingent cash payments of up to £42 million in CY 2025 and CY 2026. As part of consideration, £500 million is paid towards assets of Nicotine replacement therapy (?NRT?) business of Haleon plc. The portfolio consists of brands including Nicotinell, Nicabate, Habitrol and Thrive available in gum, lozenge and patch forms across over 30 markets. This divestment will allow Haleon to exit the NRT category outside of the US and will reduce complexity across the business allowing increased focus on strategic growth areas. The acquisition will enable the Company to gain access to a global OTC anchor brand and is seen as a potential vehicle to build the Company?s global consumer healthcare OTC business. Prior to completion of the transaction, Haleon Group will transfer assets related to the NRT portfolio into Northstar Switzerland and/or its fully-owned step-down subsidiaries. As described above, the Company will own 100% shareholding in Northstar Switzerland on the completion of the transaction. Upon closing of the transaction, Dr. Reddy?s will acquire the NRT business in all countries outside of the United States. However, operations will transition to Dr. Reddy?s in a phased approach to ensure successful integration of the business. The financial results of the NRT business represented net revenue of £217 million for the financial year ended 31 December 2023.

The closing of the transaction is subject to satisfactory completion of customary closing conditions including the applicable waiting periods under applicable merger control and transaction is expected to close by early Q4 of calendar year 2024. The proceeds from the transfer of inventory will be received within the same timeframe. Use of the net cash proceeds will be determined in line with capital allocation priorities, including reducing leverage. Assuming completion of the transaction in early Q4 2024, this divestment is expected to dilute FY 2024 net revenue and adjusted operating profit by c. 0.5% and c. 1% respectively.