Business & Investment

Unilever is looking at GSK’s consumer goods sector for a £ 50bn trading potential

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Consumer goods giant Unilever said it approached GlaxoSmithKline about the acquisition of the pharmaceutical group’s consumer goods division after the newspaper reported that its £ 50 billion bid was rejected.

Unilever, which has been criticized by some investors for its slump in stock prices, confirmed its approach to potential acquisitions in a statement on Saturday.

“GSK Consumer Healthcare is an attractive consumer health leader and will be a strong strategic fit as Unilever continues to restructure its portfolio.”

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“I’m not sure if an agreement will be reached.”

GSK declined to comment on this approach. The Group’s consumer goods business will be spun out to another listing in the middle of this year.

Earlier, The Sunday Times in the United Kingdom said Unilever’s bid for a business at the end of last year was worth about £ 50 billion and was rejected by division’s minority shareholders GSK and Pfizer as being too low.

The report added that Unilever, which owns brands such as Dove Thorpe and Marmite, understood that Glaxo’s approach to the portfolio of household brands such as Panador painkillers and Sensodyne toothpaste was one-sided.

The bid did not include recognition of acquisition premiums or synergies, and it was not clear whether the group would offer higher offers, the newspaper said.

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Unilever declined to comment on whether to return with a higher bid. Last year, securities firm Jeffreys set the valuation of the entire consumer unit at £ 45 billion.

Unilever CEO Alan Jope is struggling to compete in the face of high inflation costs, especially in emerging markets, which are the largest source of revenue, putting pressure on stock prices to turn around. It is being hung.

FTSE-listed conglomerate stocks rose 18% on P & G and 1.4% on Reckitt, despite a pandemic increase in grocery and household goods shopping benefiting all three companies. It has fallen 10% over the past year, compared to the decline in the stock price.

UK fund manager Terry Smith, whose fundsmith vehicle is Unilever’s top 10 investor, criticized the group this week for promoting sustainable credit at the expense of performance.

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Smith couldn’t comment immediately.

Investor pressure

Investor activists have also emerged at GSK.

Last April, US activist hedge fund Elliott Management unveiled a multi-billion pound stake in GSK, seeking a company shake-up with CEO Emma Walmsley after lagging behind in the COVID-19 vaccine race. I put pressure on you.

The consumer bailout industry, traditionally attached to the prescription drug sector, is also undergoing a major transformation as several pharmaceutical companies no longer benefit from the combination.

In November, Johnson & Johnson announced plans to spin off the consumer health sector, the owner of the Listerine and baby powder brands, with a focus on pharmaceuticals and medical devices. Sanofi states that its consumer unit will be a “stand-alone” business.

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For Unilever, this deal will be Jope’s biggest move since taking office as CEO in 2019.

He previously dismissed the proposal that Unilever is on the market for large transactions, instead focusing on small acquisitions in fast-growing areas such as luxury beauty, plant-based foods, health and wellness. Said to guess.

If the deal with GSK is signed, Unilever will be the second deal with GSK after acquiring the health food and beverage business, including Horlicks, in the Indian and other Asian markets for € 3.3 billion in 2018.

($ 1 = 0.7314 pounds)

(Written by William Schomberg, edited by Mark Heinrich and Jan Harvey)

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Unilever is looking at GSK’s consumer goods sector for a £ 50bn trading potential

https://financialpost.com/pmn/business-pmn/unilever-eyes-gsks-consumer-goods-arm-in-possible-50-bln-pound-deal-2 Unilever is looking at GSK’s consumer goods sector for a £ 50bn trading potential

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