Glaxo rejects $68 billion Unilever bid for consumer business

Glaxo said in a statement on Saturday that it had received three unsolicited offers Unilever for its consumer healthcare business, last December 20 with £41.7 billion in cash and £8.3 billion in Unilever shares.

,GSK Rejects all three proposals on the grounds that they fundamentally underestimated the consumer healthcare business and its future prospects.”

Unilever confirmed the approach in a statement on Saturday, saying the Glaxo unit would be a “strong strategic fit” as the owner of Ben & Jerry’s ice cream and Dove soap revamps its portfolio.

Unilever is still interested and could come back with a new bid, although no final decision has been made, people familiar with the bid told Bloomberg. Glaxo’s board still prioritizes the planned spin-off of a business that includes brands like Sensodyne toothpaste and Advil pain reliever.

A potential acquisition would rank among the top deals globally since the start of the coronavirus pandemic, and comes at a time when merger and acquisition activity is at an all-time high. A deal would accelerate the transformation of two of the UK’s biggest companies, each facing shareholder pressure to improve performance.

with analysts’ evaluations glaxo In a consumer business of up to £48 billion, any successful offering from Unilever must include a significant premium to that level, as well as a significant premium to enticement, considering synergies. glaxo away from the spin-off plan, which is already in an advanced stage.

dental profession

The dental business is the main attraction in Glaxo’s consumer portfolio, offering the biggest growth as almost all other businesses and brands are either losing momentum or growing slowly, the people said. The consumer health unit took its current shape in 2019 following a deal with Pfizer Inc., which holds a minority stake. Glaxo said it expects the unit to “deliver annual organic sales growth in the 4%-6% range over the medium term.”

Glaxo Chief Executive Officer Emma Walsley has been under pressure from shareholders, including activist fund Elliott Investment Management, to be more open to the sale of the consumer division as it seeks to revive the core pharmaceutical business. In December, the company hired former Tesco plc CEO Dave Lewis to lead the spin-off and listing of the consumer goods branch.

Glaxo previously had interest for the business from Advent International, CVC Capital Partners and KKR & Co, even as it was preparing for listing last fall.

Unilever CEO Alan Jopp is also under pressure from some investors over the company’s poor performance.

Terry Smith, founder of Fundsmith LLP and one of Unilever’s top 15 shareholders, criticized the group in his annual letter to investors this week. He said the company, whose brands also include Hellmann’s Mayonnaise and Domestos Cleaner, “lost the plot” with its focus on publicly displaying sustainability credentials at the expense of focusing on the business.

stability push

Jopp continues the sustainability campaign led by former CEO Paul Polman. Under the two heads, Unilever has reshaped its portfolio, acquiring Glaxo’s consumer operations in India from slow-growing businesses such as its spread unit and, most recently, selling its tea business, which includes Horlicks. Brand included.

Still, shares have fallen 10% over the past 12 months, which compares with a 20% gain for competitor Nestle SA, where CEO Mark Schneider has sought more growth to seek new growth and weed out underperforming units. More aggressive steps have been taken.

Unilever completed its streamlining into a single UK-based entity a little more than a year ago, abandoning its longstanding dual nationality and reversing an earlier plan to consolidate in the Netherlands. One reason for abandoning the cumbersome framework was to ease the possibilities of transformative mergers and acquisitions deals.

Deutsche Bank AG and Centerview Partners LLC are advising Unilever, according to people familiar with the situation. Glaxo Goldman Sachs Group Inc. and Citigroup Inc. Listing and Activist Defense, Bloomberg News reported in June.

The Times first reported the Unilever offer on Saturday.

This story has been published without modification in text from a wire agency feed.