Unilever eyes GSK’s consumer goods arm in possible 50 billion-pound deal

  • Unilever confirms interest in GSK assets
  • GSK’s consumer business will be a “strong strategic fit”
  • The Sunday Times says the £50bn offer was rejected in late 2021
  • Unilever is under pressure from shareholders over the share price

Jan 15 (Reuters) – Consumer goods giant Unilever (ULVR.L) said it has contacted GlaxoSmithKline (GSK.L) about buying the pharmaceutical group’s consumer goods arm, after a newspaper reported that 50 billion pounds ($68.4 billion) had been offered. on her. It was rejected.

Unilever, which has come under fire from some investors for its low share price, confirmed the approach regarding a potential acquisition of the company in a statement on Saturday.

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

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“There can be no certainty that any agreement will be reached.”

GSK declined to comment on the approach. The group’s FMCG business is scheduled to be listed in a separate list in the middle of this year.

Earlier, Britain’s Sunday Times newspaper said Unilever’s bid made late last year was worth around £50 billion, and was rejected as too low by GSK and Pfizer (PFE.N), who own a minority stake in the division.

The report added that the approach taken by Unilever, which owns brands such as Dove soap and Marmite, to Glaxo’s portfolio of household brands including Panadol balms and Sensodyne toothpaste, was understood to be undesirable.

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

Unilever declined to comment on whether it would return with a higher offer. Last year, Jefferies Brokerage estimated the valuation of the entire consumer unit at 45 billion pounds.

The offer comes as Unilever CEO Alan Jobe is under pressure to change its plunging share price as it struggles to compete in the face of rising inflationary costs, particularly in emerging markets, its largest source of revenue.

The FTSE-listed conglomerate is down 10% over the past year compared to P&G’s 18% rise and Reckitt’s 1.4% decline, despite the pandemic-induced boost in shopping for groceries and household goods that has benefited the three companies. Read more

British fund manager Terry Smith, whose car Fundsmith is a top 10 investor in Unilever, this week criticized the group for promoting sustainability credentials at the expense of performance.

Smith could not be reached for comment.

investor pressure

Investor activity has also reared its head in GSK.

In April last year, US hedge fund activist Elliott Management disclosed a multi-billion pound stake in GSK, putting pressure on CEO Emma Walmsley to explore a change in the company after it fell behind in the COVID-19 vaccine race. Read more

The consumer therapies industry, which has traditionally been associated with the prescription drug sector, is also in the midst of a major transformation as many pharmaceutical companies no longer see a benefit in combination.

Johnson & Johnson (JNJ.N) in November revealed plans to separate its consumer health division, which owns its Listerine and Baby Powder brands, to focus on pharmaceuticals and medical devices. Sanofi said its consumer unit will become a “stand-alone” company. Read more

For Unilever, the deal will be Jobe’s biggest move since he became CEO in 2019.

He previously dismissed suggestions that Unilever was in the market for big deals, saying instead that the company would focus on smaller acquisitions in fast-growing areas such as luxury cosmetics, plant-based foods and health and wellness.

If a deal is struck with GSK, it will be Unilever’s second deal with the company after it bought its health food drinks business, including Horlicks, in India and other Asian markets for €3.3 billion in 2018.

(dollar = 0.7314 pounds)

(This story has been paraphrased to change Glaxosmithkline to GlaxoSmithKline in paragraph 1.)

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Written by William Schomberg; Editing by Mark Heinrich and Jean Harvey

Our Standards: Thomson Reuters Trust Principles.

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