Unilever understands GSK's consumer goods division in a 50 billion-pound agreement
Unilever, a consumer goods company, said on January 15 that it had approached Glaxosmithkline about buying the company's consumer goods division, according to a newspaper reports that a 50 billion-pound ($68.4 billion) offer it made had been refused.
Unilever, which has been criticized by some investors for its low share price, has confirmed his view of a potential acquisition of the business on Saturday.
"GSK Consumer Healthcare is a leader in the attractive consumer health space and would be a strong strategic fit," said Unilever.
"There is no certainty that any agreement will be reached."
GSK declined to comment on its approach. In the middle of this year, the group's consumer goods business is expected to be divided into a separate listing.
The Unilever bid for the business made late last year was worth roughly 50 billion pounds, according to the Sunday Times. GSK and Pfizer, which owns a minority stake in the division, were rejected as too low.
The approach taken by Unilever, which owns brands such as Dove soap and Marmite, was thought to have been unolicited, according to the report.
The newspaper claimed the offer did not include a takeover premium or recognition of synergies, adding that it is unclear if the group will make a higher offer.
Unilever declined to comment on whether it would return with a higher offer. Jefferies put a valuation for the entire consumer unit at 45 billion pounds last year
The offer comes at a time when Unilever's Chief Executive Alan Jope is under pressure to turn around its long-term stock price as it struggles to compete in the face of rising inflationary costs, particularly in emerging markets, which is its biggest source of revenue.
Despite a pandemic-driven rise in groceries and household goods that has benefited all three enterprises, the FTSE-listed conglomerate's stock has fallen 10% in the last year.
Terry Smith, a British fund manager who has a Fundsmith vehicle, who is a top-10 Unilever investor, has criticised the group for promoting sustainability credentials at the expense of performance.
Smith was not immediately available to comment.
GSK has also reassessed investor activism.
Elliott Management, a nonprofit hedge fund established in the United States in April last year, bought a multi-billion pound stake in GSK, putting pressure on CEO Emma Walmsley to contemplate a shake-up of the company after it fell behind in the COVID-19 vaccination race.
As several pharmaceutical companies no longer see a benefit in a combination, the consumer remedies industry, which has traditionally been akin to the prescription drug business is also in a phase of significant transformation.
In November, Johnson & Johnson unveiled plans to spin off its consumer health division, the owner of the Listerine and Baby Powder brands, to focus on pharmaceuticals and medical equipment. Sanofi has said its consumer division will become a "standalone" business.
For Unilever, the transaction would be the most effective move for Jope since being the CEO in 2019.
He has previously rejected suggestions that Unilever was in the market for big deals, stating that the company would focus on small acquisitions in fast-growing areas like luxury beauty, plant-based foods, and health and wellness.
If a deal with GSK does go through, it will be Unilever's second commercial with the company, after it purchased its health food drink business, including Horlicks, in India and other Asian markets for 3.3 billion euros in 2018.
($1 = 0.7314 pounds)