GSK up on legal relief and Haleon placing, THG calls off talks with Apollo

“Despite an unexpected 0.3% contraction in the UK economy in March, the first quarter still saw GDP growth of 0.1%, showing greater resilience than many had expected at the start of the year,” says AJ Bell Investment Director Russ Mould.

“Whether the March number is the start of a negative trend will become clearer when the April GDP estimate is published in mid-June. For now, with the Bank of England still battling double-digit inflation, the door is certainly open to further rate rises. The FTSE 100 was steady this morning, making modest progress.

“After a surge in jobless claims the market will be watching the release of consumer sentiment data in the US, alive to the risks of a recession as the debate continues over the likely trajectory of interest rates on the other side of the Atlantic. The latest dive in the shares of regional lender PacWest Bancorp, as deposits evaporate, only adds to the pressure on the Federal Reserve.”

GSK / Haleon

“Shares in GSK have been in the doldrums since the market started to fret about legal action concerning heartburn treatment Zantac and accusations that it causes cancer. Investors have feared it could be forced to pay out billions in compensation.

“Slowly, GSK seems to be winning the battle after a Canadian court dismissed a proposed class action, following a similar move in the US late last year.

“While the legal fight is not over, the latest news gives investors a new reason to reappraise GSK, along with news that it has successfully sold a chunk of its shares in Haleon at a near-market price. The business was created from assets owned by GSK and Pfizer, and the two drug companies remained shareholders when the demerger happened.

“They both said they would sell down their positions in time, but the ease at which GSK has placed 240 million shares in Haleon would suggest it won’t have a problem selling the remaining 10.3% stake in the business.

“Essentially that is also good news for Haleon and the perceived risk to its share price from the significant overhang – there is nothing worse than two major shareholders openly saying they don’t want to keep their shares for long.”

THG

“The misery around nutrition and cosmetics e-commerce play THG goes on.

“Down more than 90% on the price at which it joined the stock market, it slumped further this morning as it called off talks with private equity firm Apollo. Investors hoping a takeover would put both them and the company’s torrid existence as a public entity out of their misery will be disappointed.”

These articles are for information purposes only and are not a personal recommendation or advice.