Unilever says it “will not increase” GSK offer

Unilever says it “will not increase” GSK offer

19 January 2022 - Deborah Wilkes

  • Unilever says it “will not increase” its offer for GSK’s Consumer Healthcare business
  • GSK has already rejected three Unilever offers
  • Latest offer had total acquisition value of GBP50 billion
  • Unilever keen to increase presence in health, beauty and hygiene

Unilever has said it “will not increase” its offer for GlaxoSmithKline (GSK) Consumer Healthcare above GBP50 billion (USD68 billion).

The consumer-goods company said it had considered recently-shared information from GSK but this had not changed its view on the value of the business.

The comments came four days after GSK revealed it had rejected three Unilever takeover offers for its Consumer Healthcare business, including one worth GBP50 billion (click here to read the News story).

The latest offer – received by GSK on 20 December 2021 – was for a total acquisition value of GBP41.7 billion in cash and GBP8.3 billion in Unilever shares.

GSK said all three offers “fundamentally undervalued the Consumer Healthcare business and its future prospects”.

The company noted that its Consumer Healthcare business had recorded sales of GBP9.6 billion in 2021. Its powerbrands include Advil, Centrum, Otrivin, Panadol, Parodontax, Polident, Sensodyne, Theraflu and Voltaren.

Unilever said at the time that it had approached GSK and Pfizer about a potential acquisition of the GSK Consumer Healthcare business but said there could be “no certainty that any agreement will be reached”.

The GSK Consumer Healthcare business is a joint venture between GSK and Pfizer, with GSK holding a majority controlling interest of 68% and Pfizer owning the remaining 32%.

Unilever’s ambitions in consumer health

Two days later, Unilever put out a statement saying that consumer health was an “attractive strategic option”, and GlaxoSmithKline (GSK) Consumer Healthcare would be a “strong strategic fit” (click here to read the News story).

The company noted that it was keen to step up its presence in health, beauty and hygiene.

But in a statement released today, Unilever said it would “not increase our offer above GBP50 billion”.

“We note the recently shared financial assumptions from the current owners of GSK Consumer Healthcare and have determined that it does not change our view on fundamental value,” added the company.

Unilever said it was “committed to maintaining strict financial discipline to ensure that acquisitions create value for our shareholders”.

GSK’s plans to demerge the business

In June 2021, GSK revealed plans to demerge its Consumer Healthcare business (click here to read the News story).

Subject to the approval of shareholders, the separation of Consumer Healthcare is due to take the form of a demerger in mid 2022 of “at least 80%” of GSK’s 68% ownership in the Consumer Healthcare business to GSK shareholders. The new standalone Consumer Healthcare business is expected to gain a premium listing on the London Stock Exchange.

GSK said the standalone business – which generated 2020 sales of GBP9.5 billion excluding brands divested and under review – would be a world leader in consumer healthcare. It will have 20 brands each with sales in excess of GBP100 million.

Soon after the June 2021 announcement, activist investor Elliott Investment Management urged GSK to consider selling its Consumer Healthcare business rather than going ahead with the proposed separation (click here to read the News story).

Responding to Elliott, GSK’s board said it was prepared to “evaluate any alternative options for Consumer Healthcare that may arise” (click here to read the News story).

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