Unilever eyeing potential £50bn deal on GSK’s consumer goods arm

Unilever, which has been the target of some investors over its underperforming share price, in a statement on Saturday confirmed its outlook for a possible takeover of the business.

“GSK Consumer Healthcare is a leader in the lucrative consumer health segment and will be a strong strategic fit as Unilever continues to reshape its portfolio.”

“There can be no certainty that there will be a compromise.”

GSK declined to comment on the outlook. The group’s consumer goods business is to be included in a separate list by the middle of this year.

Earlier, Britain’s Sunday Times said Unilever’s bid for the business done at the end of last year was worth around £50 billion, and was dismissed as too low by GSK and Pfizer, the division’s owns a minority stake in

Unilever, which owns brands such as Dove Soap and Marmite, said the outlook for Glaxo’s portfolio of household brands, which includes Panadol pain relievers and Sensodyne toothpastes, was deemed unwelcome, the report said.

While the bid did not include any acquisition premium or recognition of synergies, it was unclear whether the group would make a higher offer, the paper said.

Unilever declined to comment on whether it would return with a higher bid. Brokerage Jefferies had last year valued the entire consumer unit at £45 billion.

The offer comes at a time when Unilever chief executive Alan Jopp is under pressure to change its stock price as it struggles to compete with high inflationary costs, particularly in emerging markets, which account for the largest share of its revenue. source.

The stock of the FTSE-listed conglomerate has fallen 10% over the past year, compared to P&G’s 18% gain and Reckitt’s 1.4% decline, despite the pandemic-induced boost in shopping for groceries and home goods, causing All three companies have benefited.

British fund manager Terry Smith, whose Fundsmith vehicle is Unilever’s top-10 investor, this week criticized the group for promoting sustainability credentials at the expense of performance.

Smith was not immediately available to comment.

investor pressure

Investor activism has also reared its head at GSK.

In April last year, US activist hedge fund Elliott Management disclosed a multi-billion-pound stake in GSK, putting pressure on CEO Emma Walmsley to explore the company’s shake-up as it seeks a COVID-19 vaccine. had fallen behind in the race.

The consumer treatment industry, traditionally tied to the prescription drug sector, is also in a phase of major transformation as many pharma companies no longer see the benefits in a combination.

Johnson & Johnson in November unveiled plans to spin off its consumer health division, which owns the Listerine and baby powder brands, to focus on pharmaceuticals and medical devices. Sanofi has said that its consumer unit will become a “standalone” business.

For Unilever, the deal will be the biggest move for Jopp since becoming CEO in 2019.

He had previously suggested that Unilever was in the market for large deals, instead focusing on smaller acquisitions in fast-growing sectors such as luxury beauty, plant-based foods and health and wellness.

If there is an agreement with GSK, it will be Unilever’s second with the company after buying its health food beverage business, including Horlicks, in India and other Asian markets for 3.3 billion euros in 2018.