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Unilever seeks from GSK's consumer goods division a 50 billion-pound deal

Unilever seeks from GSK's consumer goods division a 50 billion-pound deal

Unilever, a consumer goods business, said on January 15 that it had approached GlaxoSmithKline about buying the pharmaceutical company's product.

Unilever, which has been criticized by some investors over its underperforming share price, has confirmed its view of a potential acquisition in a statement on Saturday.

"GSK Consumer Healthcare is a leader in the attractive consumer health space and would be a strong strategic fit," said the company.

"There can be no certainty that a conclusion will be reached," said the author.

GSK declined to comment on the proposed approach. The group's consumer goods business is expected to be split into a separate listing in the middle of this year.

The Unilever offer 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 share in the division, were rejected as too low.

Unilever, which owns Dove soap and Marmite, has adopted a slew of household brands including Panadol painkillers and Sensodyne toothpaste, according to the report.

The newspaper said the bid did not include any takeover premium or recognition of synergies, adding that it was unclear whether the group would make a higher offer.

Unilever declined to comment on whether it will 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 expenses, especially in emerging markets, as its biggest source of revenue.

Despite a shortage of groceries and household goods, the FTSE-listed conglomerate's stock has dropped by 10% over the past year.

Terry Smith, a British fund manager, is a top-10 Unilever investor. This week he criticized the company for promoting sustainability credentials on the back of its performance.

Smith was not immediately available to comment.

PRESSURE FOR INVESTOR

GSK has also raised its head in investor activity.

Elliott Management, a US activist hedge fund, reportedly revealed a share in GSK in April last year, putting pressure on CEO Emma Walmsley to contemplate a shake-up of the company.

The consumer remedy industry, which has traditionally been linked to the prescription drug industry, is in an important phase of transformation as several pharmaceutical companies no longer see a benefit in a combination.

Sanofi has announced that its consumer health division would be a "standalone" business.

For Unilever, this would be the biggest move for Jope since being the CEO in 2019.

He has previously rejected suggestions that Unilever was in the market for large deals, stating that it would focus on smaller acquisitions in fast-growing areas such as luxury beauty, plant-based foods, and health and wellness.

If a transaction with GSK does go through, it will be Unilever's second shareholder after it bought its health food drinks business, including Horlicks, in India and other Asian markets for 3.3 billion euros in 2018.

($1 = 0.7314 pounds)

In paragraph 1, this story was rewritten to convert Glaxosmithkline to GlaxoSmithKline.

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