). According to my June 30 statement, I held 2,700 GSK shares with an adjusted cost base of US$40.34 and a market value of US$43.53. However, my July 31 statement says I now own only 2,160 GSK shares with an ACB of US$50.42 and a market value of US$42.17, in addition to 2,700 new shares of Haleon PLC with an ACB of US$7.45 and market value of US$7.03. Now I have a loss on paper for my GSK shares.
All else being equal, spinning out the value of Haleon would have caused GSK’s share price to drop substantially. To avoid that – and to make its share price and earnings per share roughly comparable with previous periods – GSK decided to consolidate its shares on a four-for-five basis, meaning the number of shares would decrease but each share would be worth more. That’s why you now own four-fifths as many GSK shares but the share price as of July 31 was similar to the price on June 30.
As for the ACB of your GSK shares, this is where things get more interesting. In a supplementary document, GSK stated that investors should allocate the aggregate cost of their original GSK depositary shares across their new GSK and Haleon shares in proportion to the relative market value of each. The company provided a sample calculation showing that, based on July 18 closing prices of GSK and Haleon on the London Stock Exchange, 81.
However, I suspect your broker did not follow this method. If you multiply your original cost base of US$40.34 per share by 2,700 GSK shares, your total cost works out to US$108,918. But if you multiply the new ACB of US$50.42 by your current 2,160 GSK shares, you get a very similar number of US$108,907. I don’t see how that can be right, because a chunk of your total ACB should have been allocated to Haleon.and discuss any concerns with your broker or a tax professional.